Jitters over political strife could drag recovery

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.

Jitters over political strife could drag recovery

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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