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Jitters over political strife could drag recovery

AFP
AFP - [email protected]
Jitters over political strife could drag recovery
Photo: 24oranges.nl/Flickr

Italy on Tuesday downgraded its estimate for growth in the second quarter, saying the economy shrank by 0.3 percent in April to June instead of 0.2 percent initially calculated.

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Gross domestic product (GDP) also contracted by 2.1 percent on a 12-month comparison, worse than the preliminary estimate issued last month of 2.0 percent, the official Istat data agency said in a statement.

Italy has been stuck in recession for two years and officials say a tentative recovery could begin later this year, although they are forecasting the economy will contract by 1.4 percent overall in 2013.

"Recent indicators show a gradual improvement," Bank of Italy governor Ignazio Visco said in a speech also on Tuesday, adding that "the decline in production should cease in the next few months".

Visco also warned, however, that "investor concern over possible political instability" could be a potential drag on the economic recovery.

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