The Awful Details Behind Italy's Economic Stagnation

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		Tech Media Wall Street Markets Strategy Sports Lifestyle Travel Politics Latest Video Clusterstock Chart Of The Day Has Been Rebranded Clusterstock Chart of the Day will now be sent as Money Game Chart of the Day. Friday, June 10, 2011 The Awful Details Behind Italy's Economic Stagnation Italian GDP came in way behind its European rivals, and may be about to get much worse, according to Societe Generale's Vladimir Pillonca. Pillonca explains that last quarter's GDP growth, a dismal 0.1% quarter-over-quarter, was largely driven by government spending. From Pillonca: Today’s detailed breakdown shows that by far the strongest component of Italian domestic demand was government consumption (0.5%qoq), while both household consumption (0.2%qoq) and investments (0.1%qoq) virtually stagnated. Consumption of durable goods was especially weak, and is now running at -6.8%yoy. An ominous sign of weak confidence in the future path of the economy. What's particularly worrying is that that government spending will soon evaporate, according to Pillonca. The country is in a difficult debt position already, with a debt to GDP ratio of 119%. It's unlikely the country will undergo austerity measures before 2012, but even a slowdown in current spending might be enough to put the country into stagnation. So it may have to choose to spend more, against the preference of ratings agencies. From Pillonca: Looking ahead, we continue to expect Italian GDP growth to average just 0.8%yoy both in 2011 and in 2012. The chronic and persistent lack of growth also carries negative implications for Italy’s fiscal trajectory, as tax revenues are highly pro-cyclical. Additional fiscal measures, even for this year, may soon become unavoidable if these trends persist. Note, Italian GDP per person has been in decline for sometime, a fact hampering the sovereign's ability to pay back its debt. Read » Also On Money Game Today: Soc Gen: We've Found It, The One "Ray Of Light" In The US Housing Market Deutsche Bank: The Turnaround In Auto Manufacturing In Q3 Will Send GDP Surging May Budget Deficit Comes In Way Smaller Than A Year Ago Here's What Is Scaring The Bejesus Out Of America's CFOs Right Now Advertisement CHART OF THE DAY: A Clear Sign Of Just How Rapidly Sentiment Is Deteriorating CHART OF THE DAY: The Complete History Of Oil Since 1861 CHART OF THE DAY: Horrible News For The Economy In A New Poll Share this: Buzz Facebook Twitter Digg Reddit StumbleUpon LinkedIn The email address for your subscription is: dwyld.kwu.careers@blogger.com Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Money Game RSS Feed Business Insider. 257 Park Avenue South, New York, NY 10010 Terms of Service | Privacy Policy

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