Italian Recession Will Drive Jobless Rate to 12%, EU ForecastsJames Hertling
Italy’s economy will shrink again this year and unemployment will continue rising in 2014 to reach 12 percent, European Commission forecasts show.
In its fourth recession since 2001, Italy’s gross domestic product will fall 1 percent this year after a 2.2 percent decline in 2012, the Brussels-based commission said today in its latest forecasts. That’s deeper than the 0.5 percent contraction it predicted in November. The economy may grow 0.8 percent in 2014, the commission said.
Prime Minister Mario Monti’s austerity policies, aimed at shrinking the euro area’s second-biggest debt load after Greece and spurring competitiveness, have been the focal point of the election campaign that ends tomorrow. With the economy shrinking, candidates including Monti have fought over how much to roll the squeeze back.
The jobless rate will rise to 11.6 percent this year from 10.6 percent last year and will peak next year, according to the commission. Its forecasts match the Bank of Italy’s projections, which see the economy shrinking 1 percent this year.
Italy’s central bank has called on whichever government emerges from the elections to consolidate public finances to boost competitiveness and economic growth. The euro region’s third-biggest economy shrank 0.9 percent in the fourth quarter of 2012, the most in almost four years.