Italy falls into technical recession

Italy has fallen into recession after its economy shrank by 0.2 per cent in the final three months of 2018, its second successive quarter of contraction.

The FT reports that Italian economy fell into a technical recession in the last half of 2018 after a sharp increase in government borrowing costs and political uncertainty driven by Rome’s populist government’s stand-off with Brussels over its budget plans.

Official preliminary data showed that Italian gross domestic product contracted by 0.2 per cent in the last three months of 2018, following an 0.1 per cent drop in the third quarter. The contraction was worse than average forecasts of economists of a 0.1 per cent drop in GDP in the fourth quarter.

Italy’s National Institute of Statistics said the quarter on quarter drop was a result of a fall in the agricultural, forestry and fishing sectors, as well as a slow down in industrial activity and services.