Italy: A Waterlogged Economy With A Debt Problem

Because of the devastating floods in the fourth quarter of 2000, Italy may have experienced the worst growth rate among the euro zone economies for the third year in a row. And 2001 may be a tough year as well.

Prime Minister Giuliano Amato has said that real gross domestic product likely grew between 2.7% and 2.8% in 2000, short of the government's target of 2.8%. Amato partly blamed the October flooding in the northern region for the weakness. The floods caused plant closings and more than 20 deaths. Industrial output in October fell 0.8%, after no growth in September. And October retail sales rose a disappointing 1.1% from year-ago levels. Consumer spending was hampered not only by the floods but also by rising inflation, which has cut into buying power.