The Italian economy contracted in the first three months of this year. The ISAE predicts growth will return this quarter, I'm not so sure. I think the problem is endemic, and associated with the particular trajectory of the ageing process in Italy. With France and Germany now both struggling to avaoid deflation, it's getting hard to see how Italy's inflation rate can stay in positive territory for long.
The Italian economy shrank in the first three months of this year, according to official figures. It suffered because of a slump in investment, and a sharp fall in exports as the euro rose in value. The national statistics office, Istat, said the economy contracted by 0.1% from the last three months of 2002 - the first quarterly fall since 2001. Istat was confirming preliminary figures released in May. It said investment fell 5% from the previous quarter, while exports were down 3.5%. Imports also dropped, but their value was almost equivalent to exports. In the previous quarter exports exceeded imports by 2bn euros (£1.4bn; $2.3bn) and Italy's economy grew by 0.4%. The government-funded economic institute, ISAE, has predicted that growth will return in the three months to the end of June. And the government is forecasting growth this year of about 1%. Over the past ten years, Italy has had one of the lowest annual growth rates in the European Union. The euro zone economy as a whole stagnated in the first quarter. Only growth in France and Spain offset contractions in Germany and Italy to keep euro zone growth flat.
Source: BBC News