6 August- New York NY- The gross domestic product (GDP) in Italy, the euro zone’s third-largest economy, contracted 0.2% in the second quarter of 2014. This weak number follows a 0.1% contraction in the first quarter. “As a result, after two quarters of shrinking GDP, Italy is officially in recession“, Steve Picarillo, President of Creative Advisory Group, Inc said in a research article.
This is the country’s third recession since 2008. Italy’s economy contracted from 2008 to 2009 and from 2011 to 2013. “Although, the GDP grew by 0.1% in the final quarter of 2013, for the first time after a two-year contraction, the estimate for the second quarter reduces the likelihood of a recovery this year“, Picarillo continued.
“Italy’s return to recession is further evidence that the euro-zone economy has not gained positive momentum in the first half of 2014″, Mr. Picarillo added. “Indeed, country-by-country economic growth appears to be slowing as the year progresses.” In the three months to June, the Belgium economy slowed. Meanwhile, Germany’s economy is showing signs of softness, and France’s economy appears to remain in stagnation for the second consecutive quarter. Official GDP numbers for France, Germany and the euro zone will be released on Aug. 14, but expectations are low. “Given the geopolitical stresses, the weakness in the banking sector, and early evidence of economic slowdown in the euro-zone’s key economies, a return to recession in the euro-zone is real possibility”, Steve Picarillo concluded.
In addition to contributing to the weakness in the euro-zone, Italy’s economic slowdown is a major impediment to the government’s efforts to reduce its huge amount of debt and is a major setback to Prime Minister Matteo Renzi, who was installed in February promising to reform and revive the economy. Without GDP growth, the government may need to amend its budget to keep the deficit below the European Union’s ceiling of 3% of GDP, which will likely further stall recovery and debt elimination.
Steve Picarillo is a global financial markets, risk, banking compliance and communications executive with exceptional experience in risk analysis of global banking systems and financial institutions. Mr. Picarillo provides analysis and commentary to the financial community, the media, investors and regulators.
For additional information on Steve, please visit his website at www.stevepicarillo.com.
The opinions in this article are the views/opinions of the author and Creative Advisory Group, Inc. (CAG), based on public information and the author’s experience. This is not a recommendation to buy, sell or trade any security, debt or any other financial instrument. The author and CAG do not hold any interest in any of entities mentioned in this posting, and have no plans of entering into any financial trade in the same in the next 72 hours.
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