Italy’s recession has now extended into an eighth consecutive quarter, meaning it has lasted a record two years, according to economic data released Tuesday. At 0.2 percent, the economic contraction was milder than economists had predicted. But the Italian economy is fully 2 percent smaller than it was at the same time last year.
While some analysts view the quarterly figure as a sign Italy is poised to return to growth, the country’s central bank actually worsened its projections for annual economic performance in mid-July. The third-largest economy in the austerity-battered Eurozone is now expected to shrink by 1.9 percent over the course of 2013, nearly twice as bad as the initial projection of a 1 percent drop in output. If Italy is indeed changing course, though, it’s thanks to “an easing of the austerity agenda by Italy’s coalition government,” CNN Money writes.
With the overall unemployment rate for the European Union above 12 percent, and about a quarter of young European Union residents unable to find work, some countries have gradually eased the pace of budget cuts and sales tax hikes. Those austerity measures were intended to stabilize debt levels around the continent, but they have actually pushed debt-to-GDP ratios to a record high. Austerity has also proven far more economically damaging in countries like Greece and Italy than supporters of the policy predicted.
As Europe’s recession grinds on and its policymakers begin to think better of their austerity fervor, the U.S. economy continues to expand too slowly to actually recover the level of job opportunity and economic security that would constitute a full recovery. Despite the European example, American policymakers have thus far failed to undo the “excessively rapid” austerity of sequestration.