The Italian economy won’t start recovering until the second half of 2013 as foreign demand fails to offset the effect of a decline in household spending, the national statistics institute said.
Gross domestic product will shrink 2.3 percent in 2012 and 0.5 percent in 2013, Rome-based Istat said today in an e-mailed report. In May, Istat projected a 1.5 percent contraction this year and a 0.5 percent expansion next. Household consumption will fall 3.2 percent in 2012 and 0.7 percent in 2013, Istat said today.
The euro region’s third-biggest economy will experience an “easing of unfavorable pressures and a modest recovery in the second half” of next year, according to the report. Still, household “spending will remain negative due to the persistent difficulties in the labor market.”
Italy’s jobless rate will rise to 10.6 percent this year, before climbing to 11.4 percent in 2013, Istat said. Its GDP projections are subject to downward revisions should “global trade slow down and tensions on financial markets sharpen,” the statistics agency said.
Istat’s forecast for this year is more optimistic than those of Prime Minister Mario Monti’s government. The Rome-based Treasury said on Sept. 20 that the economy will contract 2.4 percent in 2012 and 0.2 percent in 2013. The International Monetary Fund predicted last month in its World Economic Outlook the Italian economy will contract 2.4 percent this year and 0.7 percent next.
“The only positive contribution to economic growth” this year and next will come from exports, Istat said. It forecast sales of Italian goods abroad to rise 1.3 percent this year and 2.4 percent next year.
Italy entered its fourth recession since 2001 in the final quarter of last year as the global slowdown aggravated the effects of waning productivity.
Monti who took office on Nov. 16 last year, has pushed through 20 billion euros ($26 billion) of austerity measures and an overhaul of both the pension system and the labor market. Still, the government’s mix of tax increases and public spending cuts to contain the euro region’s second-biggest debt has weighed on demand.
The Italian economy contracted at a slower pace in the three months through September and will emerge next year from the recession, the country’s central bank said Oct. 16. GDP shrank “again in the third quarter, but less than in the first half,” the Rome-based Bank of Italy said in its quarterly economic bulletin.
Finance Minister Vittorio Grilli said last week that the government’s economic policies will allow a return to growth in 2013.
“A different cyclical posture worldwide and the fact that our own reforms are going to be sinking in” will be drivers of growth starting from the second quarter of next year, he said in an Oct. 31 interview with Bloomberg Television.