Italy’s economy shrinks by 0.8%

Italy’s economy shrank by 0.8 per cent in the second quarter, official figures showed yesterday, as the recession-hit country struggled to pull itself out of a slump despite a government growth plan.

Italy’s gross domestic product (GDP) was down 2.6 per cent from a year earlier, the National Statistics Institute (ISTAT) said.

Italy’s economy has been shrinking since the third quarter of 2011. The figures were slightly revised down from ISTAT’s August estimate of a 0.7 per cent dip in the economy in the second quarter and a drop of 2.5 per cent on a 12-month basis. Economists had forecast a similar drop.

The main reasons for the second-quarter contraction were a 0.7 per cent fall in consumption from the previous quarter and a 2.3 per cent drop in investment.

The Italian economy has been hit by a series of draconian austerity plans and a rise in unemployment to over 10 per cent. The eurozone’s third largest economy is considered one of the countries most at risk for contagion from the debt-crisis.

The goverment’s efforts to balance austerity with growth-boosting measures have been criticised by some, who say the latter have been tepid at best.