Italy in recession as eurozone sluggish

Italy in recession as eurozone sluggish

Four years after Italy slipped into recession, the country's statistics agency confirmed that it is has fallen on the same ground, refueling talks about the potential decline of the eurozone economy.

Italy's Economy Minister Giovanni Tria on Thursday said the country's response its decline into recession in the second half of previous year must be to increase public investment, adding that all European Union countries should seek to bolster growth.

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Economic growth across 19 countries in the eurozone is languishing, and Italy's growth has been dragged down due to a slowdown across the continent.

"The growth forecasts on which the budget was based have already been blown out of the water and euro-zone growth continues to weaken", said James Athey, a portfolio manager at Aberdeen Standard Investments in London. "Italy is going to have to face up to some real problems".

"It was obvious there would also be a slowdown in Italy given our country´s export-oriented economy", he said, calling for public works projects to stimulate activity.

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Furthermore, Rome and Brussels have been at odds ever since the Commission started blocking Italy's plan to implement various tax cuts and increased spending.

Prime Minister Giuseppe Conte said government measures would lead to a recovery in the second half of 2019.

The International Monetary Fund (IMF) slashed its forecast for economic growth in 2019 and 2020 last week, blaming weakness in Europe and some emerging markets.

"However, the standoff between the government and the European authorities over the budget in the summer of 2018 has exacerbated the country's weaknesses". "The ISTAT data show something fundamental", 5-Star Movement (M5S) leader Di Maio said. Just last week, Conte said in a Bloomberg interview in Davos, Switzerland that he expected GDP to climb as much as 1.5 percent this year and ruled out any need for a budget adjustment to meet targets.

Uncertainty over Britain's exit from the European Union also weighed on sentiment that is expected to drag down growth in the final quarter when the data becomes available next month. German retail sales fell in December at their steepest rate since 2007, and vehicle exports to China are on the wane. But that's a far cry from the 0.4% growth in the first two quarters of the year. As a result, unemployment in the eurozone is about double the U.S.'s 4 percent at 7.9 percent.

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