In a year’s time, Italy’s economy dipped twice as much as predicted by the Italian government of techocrats. The financial hit spread itself around to include agriculture, industry and services. Italy was down close to 0.8 percent in the GDP after the first quarter in 2012. It was the country’s fourth drop in a row. A survey of analysts came close, saying Italy would fall 0.6 percent, but it was worse than even they expected. The country hasn’t seen a fall like that since 2009.
While the drop is startling, it should be noted Italy’s economy has dragged for more than 10 years. Financial investors are worried. Prime Minister Mario Monti is having a difficult time of it, trying to cut the deficit 0.1 percent of the GDP by 2014. Italy needs public financing from Monti’s European partners. It’s benchmark bond yields are still sitting at nearly 6 percent, and acquired growth was negative. And, if in the next two quarters, the GDP reads flat, it will down a total of 1.9 percent since last year.
Austerity Measures for Italy
Monti claims he will step down next spring as the new election begins. At the end of 2011, he made more than 20 billion euros in cuts to stave off a debt crisis, but the package was flawed because of its compounding tax hikes. The cuts only pushed Italy further into the recession, and dampened the spirits of consumers. Consequently, 2012 will see an influential dive in spending per capita, the first of its size since post war, the retail confederation projected. Italy’s economy is very inefficient, some say. It has failed in the areas of infrastructure development, research investment and market reforms. Italy also has an above average deficit. Last year, the country’s ranking was 87th in the world.
Factors surrounding the debt crisis include the financial forecasts that based everything on debt issue costs. In the second quarter, Italy experienced earthquakes in Emilia. Italians aren’t saving anymore. They don’t have the money to save or invest, and earlier this summer, Italy paid its highest interest rates so far this year. Taking all that Italy has lost and most likely continue to lose, its double-dipped in recession. Unemployment is heading toward 10.4 percent for 2012, and 11.8 in 2013, but hitting a peak of 12.4 percent in the fourth quarter of 2013.
Gold Reserves in Italy
The business lobby, Confindustria, criticized the labor reforms that were recently approved by parliament. The lobby stated the reform was “inferior to expectations and the needs (of the market), and risks increasing complications.” There is no available data from the effects of the reform, but it is far removed from Italy’s impressive holdings. Italy is home to the world’s third largest gold reserve; an innovative business community; and industrious agricultural wine communities. Italy is the world’s largest producer in wine. The country is also savvy in the automobile industry, appliances and fashion. Post war was a turning point because industry abruptly replaced agriculture. The country itself was devastated in post war.
Italy continues to lead in world trade and exports. It continues to live by very high standards, perhaps deceiving the perception that it is enjoying the world’s eighth highest quality of life. The southern part of the country is underdeveloped and poor. Further issues holding the country up from advancing are political corruption, organized crime and unemployment.
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