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Italy's real GDP falls below 2001 level

Negative growth of 2.4% in 2012 as recession bites

01 March, 18:00
Italy's real GDP falls below 2001 level (ANSA) - Rome, March 1 - The recession is biting so hard in Italy that the nation's real gross domestic product (GDP) dropped below its 2001 level last year, Istat said Friday.

The national statistics agency added that the nation's debt-to-GDP ratio rose to 127% in 2012 and the tax burden rose to a record 44%.

The country's massive national debt of around two trillion euros is the main reason it was exposed to the eurozone debt crisis.

Italy's already high tax burden increased with hikes introduced by outgoing Premier Mario Monti's emergency government.

These tax increase were part of efforts to restore order to the Italy's public finances after Silvio Berlusconi quit as premier in November 2011 when the country's financial crisis threatened to spiral out of control.

Monti's austerity measures also had the effect of deepening the recession Italy slipped into in the second half of 2011.

This is reflected by Istat saying Friday that Italy's GDP fell by 2.4% in 2012 and household spending dropped 4.3%, taking real GDP - which is adjusted for price changes - to below the levels of over a decade ago.

The recession has also driven up Italian unemployment to record levels. In January, overall unemployment rose to 11.7% and youth unemployment reached 38.7%, the highest monthly rates for both since the statistics agency started issuing monthly figures in January 2004 and since the start of quarterly data in the fourth quarter of 1992.

For the year 2012, Italy's national unemployment rate was 10.7%, up from 8.4% in 2011, and 2012 unemployment in southern Italy was 17.2%. The nationwide rate in 2012 is the highest since records began in 1993. The difficult economic climate has also slowed price increases.

Italian inflation fell to 1.9% in February from 2.2% in January, Istat said. It was the lowest rate since December 2010, the statistics agency said. Inflation has now fallen five straight times, Istat said on the basis of its preliminary estimates.

Prices in the so-called inflation 'trolley' of most frequently bought goods rose 2.4% annually in February, down from 2.7% in January.

Istat said that the 2012 deficit-to-GDP ratio was 3% and that Italy posted a primary surplus of 2.5% last year, up from 1.2% in 2011.