The Italian economy rallied slightly in the second quarter growing by 0.3% compared with 0.1% in the first, final data showed today, but this was before announced crash budget cutbacks take effect.
External demand was the main driver of growth, and exports rose by 0.9%, Istat said. Imports fell by 2.3%. Consumption and investment increased by 0.2%.
On a 12-month basis, the economy showed growth of 0.8% in the second quarter, Istat also said. The data for the month and for the year confirmed initial estimates.
Italy has been handicapped by weak growth for several years, and is now in the throes of pushing through crash measures and cutbacks to correct the budget because of market pressure over high national debt.
Earlier this week, the Italian Senate approved €54.2 billion in budget measures it hopes will help give Italy a balanced budget by 2013. Lawmakers are expected to give the measures the final go-ahead next week.
In August the Italian central bank warned of the negative effects on growth of these measures, and called for structural reforms to strengthen the potential for growth and avoid what it termed stagnation.
Even with the announced cutbacks, the government still projects annual growth of 1.1% in 2011, a target which many analysts say is out of reach.
The OECD, the Paris-based organisation of rich nations, projected yesterday that Italy would shrink by 0.1% in the third quarter as it warned that several major economies, including Germany, could be entering recessionary danger zones.
