Italy Falls Back Into Recession For The Third Time Since 2008

Italy slipped into recession for the third time since 2008 in the second quarter, underlining the chronic weakness of the eurozone’s third-largest economy and pressuring the government to complete promised reforms. Figures on Wednesday from statistics agency ISTAT showed gross domestic product unexpectedly declined by 0.2% in April-June from the previous three months. A Reuters poll of economists had forecast growth of 0.2%. The economy also shrank by 0.1% in January-March, meaning it has returned to recession, defined as two consecutive quarters of contraction. Italian stocks fell after the data and the risk premium between Italy’s 10-year bonds and those of Germany widened. In a newspaper interview before the data release, Economy Minister Pier Carlo Padoan said that despite indications growth would fall short of forecasts on which 2014 tax and spending plans are based, Italy would not need an emergency budget.

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