EU Erosion

Italy’s recession caused as much damage ‘as a war’


Employers’ confederation says country still on ‘a razor’s edge’

19 December, 19:41

Giorgio Squinzi, head of powerful Italian industrial employers' group Confindustria

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Giorgio Squinzi, head of powerful Italian industrial employers’ group Confindustria


(By Sandra Cordon) (ANSAmed) – ROME – Italy’s deep recession has caused as much damage to the country as a war and, although signs of recovery may be emerging, it is too soon to declare that a recovery has begun, the head of powerful industrial employers’ group Confindustria said Thursday.

“I see a lot of optimism – but beware,” said Squinzi as his organization’s research centre released an economic outlook suggesting recovery is imminent.

The centre also warned that Italy “is on a razor’s edge” with a risk of social breakdown due to falling real wages and high unemployment and taxes, creating damage “commensurate with that from a war”.

It revised down its estimates for 2013 gross domestic product (GDP) to a contraction of 1.8% from a previous forecast of -1.6%, followed by a small recovery in 2014.

“At this moment we cannot say that the recession is over and that there is a recovery,” Squinzi added. “Let’s see what happens in the next few months”.

His caution seemed to contradict recent statements by Italy’s Economy Minister Fabrizio Saccomanni, who said the recession was over after seeing statistics showing that after eight consecutive quarters of economic losses, GDP in the third quarter was flat. Building on that, on Wednesday Premier Enrico Letta said the seeds of recovery are beginning to sprout and the government expects that in the fourth quarter, Italy will return to positive growth.

All of that means the economy may have hit bottom, but it does not necessary prove the recession is truly over, said Squinzi.

Even if the economy has stopped falling, Italy must now cope with the severe damage wrought by economic weakness that dates back to 2007, he added.

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