Italy officially in recession

Italy's economy shrank 0.5 per cent in the third quarter, putting the country in recession, official data showed on Wednesday, confirming figures released in mid-November.

Gross domestic product in the eurozone's third largest economy contracted 0.4 per cent in the second quarter, with recession counted as two successive quarters of falling output.

Compared with the third quarter of 2007, GDP contracted 0.9 per cent in the same period this year, the national statistics agency ISTAT said.

Also Wednesday, ISTAT said industrial production fell 1.2 per cent in October, slightly better than analyst forecasts for a 1.3 per cent decline surveyed by Dow Jones Newswires.

The new figures bode ill for the fourth quarter.

The Organisation for Economic Cooperation and Development has forecast that Italy's GDP will shrink 0.4 per cent this year and 1.0 per cent in 2009, while the International Monetary Fund (IMF) has predicted slumps of 0.2 per cent and 0.6 per cent, respectively.

Compared with a year earlier, October industrial production fell 6.9 per cent and for the first 10 months of the year, it fell 2.9 per cent.

Economists had predicted a smaller year-on-year drop of 5.0 per cent.

Production in September shrank 2.6 per cent, according to ISTAT, revising an earlier estimate of 2.1 per cent.

The contraction in October was attributed to lower output in intermediate goods, down 2.1 per cent, and investment goods, off 1.5 per cent.

Production of consumer goods rose 0.8 per cent.