Italy’s economy unexpectedly moved back into negative territory in the first quarter due to poor industrial results after barely exiting its worst post-war recession.
The official Istat data agency saidin an initial estimate on Thursday that gross domestic product (GDP) had shrunk by 0.1 per cent from the previous quarter and was down 0.5 per cent from the same period last year.
“This is a very weak result… Growth has stopped – even worse it’s going backwards,” said Chiara Corsa, a macroeconomic expert at Italy’s UniCredit bank.
“It’s due to weakness in industry. We had expected a positive contribution from exports and domestic demand,” she said.
Stocks in Milan closed the day down 3.61 per cent at 20,419.62 points after starting the trading day in positive territory as analysts had predicted a meagre recovery would continue in the first three months.
It was the worst-performing of Europe’s main stock markets.
The differential or spread between the interest on Italian 10-year-government bonds and benchmark German ones also widened to 184 basis points from 154 on Wednesday, indicating growing investor unease.
Nicola Borri, a professor of macroeconomics at Rome’s LUISS university, said: “This is clearly bad news.
“In the last quarter we saw a slight return to growth and thought it was the beginning of a recovery but the hope for a return to growth is on freeze,” he said.
Forecasts had been for growth of 0.1 or 0.2 per cent, and the results were a blow, he said.
“This is not good news for (Prime Minister) Matteo Renzi ahead of the European Parliament elections. This means that the situation in the country is worse than we thought.
“More incisive measures are required,” he said.