Recession looms over Italian Economy

The Italian economy appears to be heading towards a recession after GDP fell 0.3% in the second quarter over the previous three-month period, its worst short-term performance since the last quarter of 2007.
According to national statistics bureau Istat, GDP growth was zero when compared to the second quarter of last year, its lowest year-on-year variation since the third quarter of 2003 when it fell 0.1%, Istat added.
''The Italian economy is on the threshold of a recession and the second half of the year is going to be even more difficult,'' observed the industrial employers association Confindustria.
''There appears to be no chance for a recovery until the second half of next year, on the condition that oil prices decline, the dollar strengthens and the European Central bank cuts interest rates,'' Confindustria added.
''The economy is in a critical state and even if it is not echnically in a recession, it looks as if it is in a de facto recession,'' observed the Concommercio retailers' association.
An economy is by definition in a recession when GDP declines for two quarters in a row.
''With GDP growth at zero and domestic spending at a standstill, the Italian economy appears to be heading towards an ice age,'' the national Confesercenti retail services association said in regard to the Istat figures.
''Swift action is needed to restore consumer confidence, jump-start investment and reduce heavy tax pressure. Everyone must do their part and the government must focus on clear, urgent and effective objectives,'' Confesercenti added.
According to the CISL trade union, the GDP figures ''show that we are moving from zero economic growth into a recession. At this point the government can no longer limit itself to controlling public spending but adopt polices which boost development and can offset the recessive trend''.
In order to protect salaries, pensions and consumer purchasing power, CISL said the government must fight inflation ''and force oil companies to cut fuel prices with the same decisiveness with which they have raised them over the past months''.
''With soaring prices and dropping demand Italians can expect a terrible September. All we can do is cross our fingers and start tightening our belts,'' the Codacons consumer group said.
In a related development, Condacons announced on Friday that it would promote a class action suit against the leading oil companies for failing to cut pump with the same promptness they hiked prices up when international crude prices rose.