'Fragile' Italian economy showing faint signs of recovery

(ANSA) - Rome, April 18 - The "fragile" Italian economy is showing signs of recovery with rising exports, but domestic consumption and the employment market remain weak, the Bank of Italy said in its latest economic bulletin on Friday.
    "Despite early signs of an improvement in domestic demand, the economic situation remains fragile," the central bank said. Businesses are still finding it hard to obtain credit, which is essential for growth and increased productivity, and job creation, it said.
    The average cost of credit in Italy is about 80 basis points higher than the eurozone average, said the report.
    "If there is to be a progressive reduction in unemployment, especially among young people who have been hit hardest by the crisis, there will have to be lasting growth and a heightened capacity for innovation among firms".
    Reflecting the weak outlook, consumption remains "well below its 2007 level" as consumers remain too fearful of their job prospects to spend, the bank said.
    Deflation remains a problem as the consumer price index is expected to remain low for the next two years, likely ending 2015 at just over 1% after dropping to as low as 0.3% in March.
    "The downward pressures (on inflation) mainly reflect the weakness of demand; the decline in producer prices and firms' declared intentions of making only very minor adjustments to their prices in the coming months suggest that these pressures will persist," warned the bank.