BUSINESS

Italy Recession Deepens, Extends Into 4th Straight Quarter

08/07/2012 07:32 EDT | Updated 10/07/2012 05:12 EDT
AP
FILE - In this Dec. 5, 2011 file picture Italian Premier Mario Monti listens to a Senator's speech in Rome. After a turbulent 2011, the 17 countries that use the euro will be quickly confronted in the new year with major hurdles to solving their government debt crisis, just as the eurozone economy is expected to sink back into recession. With government finances under pressure as growth wanes, the eurozone will find it even more difficult to shore up shaky banks and reduce the high borrowing costs that threaten Italy and Spain with financial ruin. As early as the second full week of January, bond auctions in which Italy and Spain need to borrow big chunks of cash will start showing whether the eurozone is finally getting a grip on the 2-year-old crisis that has seen Greece, Ireland and Portugal bailed out. (AP Photo/Gregorio Borgia)
MILAN - Italy's recession has deepened with its economy shrinking for the fourth quarter in a row.

Official government statistics released Tuesday show that that the economy contracted by 0.7 per cent in the second quarter compared with the previous three months.

Compared with the same period of 2011, the economy shrank by 2.5 per cent — the worst year-on-year contraction since the fourth quarter of 2009, when the economy shrank by 3.5 per cent.

Premier Mario Monti has recently been courting other European leaders seeking some fiscal leeway to allow Italian to grow the economy, rather than sticking to tight budgetary targets that tend to have a recessionary impact. Economic growth is seen as the most effective means of bringing down the nation's high public debt, now at 123 per cent of the country's GDP.