“The Organization for Economic Cooperation and Development cut its economic forecast forItaly for the second time this month as weak household demand extends the longest recession in more than two decades.
Italy’s gross domestic product will contract 1.8 percent this year before rising 0.4 percent in 2014, the Paris-based OECD said today in its Global Economic Outlook. That compares with a 1.5 percent decline for 2013 and growth of 0.5 percent in 2014 forecast in a May 2 survey on Italy, which revised its November predictions.
The country’s recession “will continue throughout 2013 as the effects of fiscal tightening and restrictive conditions bear down on economic activity,” the OECD said in today’s report. “Employment and hours worked will continue to fall, constraining household budget and consumption spending.”
Italy slipped into recession in the final quarter of 2011. The austerity policies of former Prime Minister Mario Monti, which helped bring the budget deficit within the European Union limit, deepened the slump in the EU’s third-biggest economy and pushed the jobless rate to the highest in almost 20 years.
“With employment likely to decline in 2013-14 and with the household saving rate having fallen significantly over the past few years, not much growth in consumer demand can be expected,” the OECD said today.
