Italy

摘要

Our panel's quarterly forecasts this month (see page 28) underscore just how severe the recession is expected to be. This follows a huge 1.9% (q-o-q) drop in GDP in Q4, a third consecutive contraction, with sizeable y-o-y declines also expected up to Q2 2010. The downturn has been led by capital expenditure as companies retrench in the face of tighteningcredit conditions and heightened uncertainty over demand. Producer confidence plunged for a ninth consecutive month to a record low in February after industrial production plummeted by 2.5% (m-o-m) in December- its fourth monthly drop - and new orders were down by almost 20% (y-o-y). Accordingly, industrial production is expected to contract by a huge 8.9% this year. External demand has also proved to be a significant drag on growth, as exports plunged at the end of 2008. Households have responded relatively favourably to the sharp slowdown in inflation, with consumer confidence increasing slightly in February although it remains at a very low level compared with the long-run average. Consumption has also been subdued by credit availability tightening and savings are on the increase. This largely reflects a deteriorating labour market at the turn of the year, with falls in employment accelerating rapidly. The jobless rate is expected to rise significantly this year, reaching 8.2% on average.