Italy stuck in deep economic recession

[June 11, 2012]  MILAN (AP) -- Official statistics confirm that Italy's economy contracted by a quarterly rate of 0.8 percent in the first three months of the year, the worst contraction in three years.

The painful recession keeps pressure on Premier Mario Monti's government, which is struggling to fend off the debt crisis and the perception that Italy could be next to seek a bailout following Spain's decision over the weekend to ask for help for its ailing banks.

The ISTAT statistics agency says the contraction is the worst since the first quarter of 2009, when the economy contracted by 3.5 percent. ISTAT forecasts that the Italian economy will contract by 1.3 percent this year, slightly more than the government's estimate of 1.2 percent.

Spending by families is down significantly.

[Associated Press]

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