Last week figures showed that Italy slipped back into recession, it’s economy contracting for the second consecutive quarter at the end of last year
Italy’s economy used to be the third largest one in the Eurozone but its gross domestic product fell a quarterly 0.2% in the last three months of last year. This is the third time in a decade that the Italian economy has slipped into recession.
One of the reasons for Italy’s economy contracting would be the coalition made by the League party with the anti-establishment Five Star Movement, as well as the battle between Rome and Brussels over the coalition’s plan to increase the budget deficit and stimulate the economy for which a settlement was reached just before Christmas.
Meanwhile, the Italian Prime Minister Giuseppe Conte blamed the trade war between the US and China, saying it has affected the country’s exports since China and Germany are its main trading partners. However, he stated there will be a relaunch of the economy in 2019 supported by the new budget laws.
Italy has a public debt of about 130% of GDP, finding itself at a tipping point, being the highest in Europe after Greece. Also, the GDP is about 5% below where it was in 2008, while unemployment, which was at 6% before the financial crisis, is now at just over 10%. Fabio Franceschi, the owner of Italy’s largest printing house, Grafica Veneta, stated that the situation was partly created because the government is not oriented toward investing.
The economic recession from Italy isn’t the only reason why the Eurozone slowed in 2018, there was also the uncertainty over Brexit, the China-US trade war, and the new vehicle emissions standards. Also, unemployment in the Eurozone is 7.9 percent, about double US’s 4 percent. Economists say that the same reasons will continue to weigh on the economic outlook for 2019.