Italy’s economy to shrink further in 2013: Official report

Newly-released figures show that Italy’s economy is expected to shrink more than expected in 2013, continuing the country’s longest recession since the World War II.

A report by Italy’s National Institute for Statistics (Istat) said on Monday that the country’s gross domestic product (GDP) will contract by 1.8 percent compared to a previous estimate of 1.7 percent contraction.

Istat added that the country’s GDP growth was expected to turn positive in the fourth quarter.

The report came following remarks made by European leaders who said Italy’s economic woes pose an existential threat to the eurozone.

Weaker growth predictions are likely to make it harder for the government to stick to European Union deficit-reduction targets or maintain pledges to cut taxes.

Italy is suffering from a severe double-dip recession since 2008 — its longest recession since the World War II.

Meanwhile, the country’s unemployment rate stood at 12.5 percent in September — the highest figure since 1977 — and is expected to hit 12.4 percent by 2014, the official Istat agency said.

The long-drawn-out eurozone debt crisis, which began in Greece in late 2009 and later on reached Italy, Spain, France, Portugal, Britain, Ireland, and Cyprus is viewed as a threat not only to Europe but also to many of the world’s other developed economies.

The worsening debt crisis has forced EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered massive demonstrations in many European countries.