Thaindian News

Rome, Dec 22 (IANS) Italy’s GDP in the third quarter of 2011 dropped by 0.2 percent from the second quarter, marking the first contraction for almost two years, said the country’s national statistics agency Istat Wednesday.

In the third quarter, household spending also fell by 0.2 percent and investment contracted 0.6 percent, while exports rose by 1.6 percent and imports were down 1.1 percent, reported Xinhua.

Istat said Italy’ overall growth for 2011 was expected to be 0.5 percent.

Premier Mario Monti’s new emergency government is to face a final vote in parliament on its 30-billion-euro (about $40 billion) austerity plan aimed to keep the country afloat in the debt crisis.

The tax increases imposed by the plan, which marks the third austerity package this year, will likely deepen the contraction, local analysts said.

According to the country’s leading industrial association Confindustria, Italy’s GDP will contract 1.6 percent in the year 2012.

Last week, Italian Development Minister Corrado Passera noted that the country’s current economical situation was “worse” than the cabinet of technocrats expected when it was appointed about a month ago.

It was necessary to restore confidence in growth and revive domestic consumption heavily penalized by heavy taxes of the austerity measures, the national retailers’ association Confesercenti said in a statement.

A contraction of the Italian economy in the last three months of this year would mark the second quarterly contraction, which technically means a recession.