Italian economy growing avoiding recession

The euro zone’s third-largest economy expanded by 0.4 percent in the first three months of this year whilst consumer spending fell 0.2 percent.

The Italian economy has been struggling behind the rest of Europe for more than ten years as a result of huge debt and low labour productivity making companies less competitive.

Political stability as a result of Berlusconi’s return to power has helped to coerce the Italian economy back into action.

Berlusconi has implemented tax cuts and mortgage relief which has boosted consumer confidence, which has helped to increased domestic consumer spending.

Italy’s neighbours have faired better in the recent economic turmoil, as Gross domestic product in Germany rose 1.5 percent from the fourth quarter whilst the French GDP rose 0.6 percent.

The GDP did decline at the back end of 2007 caused by a fall in consumer spending, which in turn, sent prices up and exports to drop, which was then exacerbated by the increase on the euro, making goods less competitive in the UK and Asia.

Bulgari SpA, the world’s third-largest jeweller, reported exchange-rate fluctuations which wiped 4 percentage points off sales in the quarter, caused by the dollar against the euro.

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