Italy's economy, the third-largest in the eurozone,
contracted by 0.7 per cent from April to June, compared with the
first quarter, official data showed Tuesday.
The figure was slightly better than analysts' predictions, which were counting on a 0.8-per-cent quarterly fall. Nevertheless, they indicated that Italy's recession, which started in the second half of last year, was showing no signs of abating.
Output was down in all three main sectors of the economy - agriculture, industry and services - national statistics office Istat said in a preliminary estimate.
On a yearly basis, Italy's gross domestic product (GDP) sunk by 2.5 per cent in the second quarter of 2012, the worst result since the last quarter of 2009, Istat said.
On current trends, the country's economy is set to shrink by 1.9 per cent this year, the statistics office added. In May, the European Commission was expecting Italian GDP to contract only by 1.4 per cent.
Markets were unfazed by the news, as by mid-morning trading the Milan stock exchange was slightly up while risk differentials between 10-year Italian bonds and equivalent German ones fell below 450 basis points.
However, Ben May of the London-based research outfit Capital Economics argued in a briefing note that the data highlighted the "huge economic and fiscal problems that Italy faces," and predicted that the country would eventually be forced to seek a full bailout.
Prime Minister Mario Monti has resisted making an application for any kind of external support - backing off even from a so-called "bailout-lite" option that would see eurozone rescue funds and the European Central Bank buy Italian bonds to reduce borrowing costs.
Adding to the gloom, Istat also said Tuesday that Italian industrial production was down 1.4 per cent from May to June. Analysts were expecting the monthly contraction to stand only at 1 per cent.
Compared to June 2011, the calendar-adjusted industrial output index decreased by 8.2 per cent, the statistics office said. Taking into account the first six months of the year, the yearly fall was 7 per cent.
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