As Italians head to the polls this weekend in order to pick what will be their 62nd government in 65 years (in an election which is being held three years early to boot, due to the collapse of Romano Prodi’s outgoing administration) one odd detail seems to stand out and sum up the multitude of political and economic woes which confront Italy at the present time: we still don’t have economic growth figures for the last quarter of 2007. Now this situation may well be an entirely fortuitous one – Italy’s national statistics office ISTAT are in the process of introducing a new methodology to bring their data into line with current EU standards as employed in other countries (Italy yet one more time is at the end of the line here, but let’s not get bogged down on this detail) – but there does seem to be something deeply symbolic about all this, especially since Italy may well currently be in recession, and may well be the first eurozone country to have fallen into recession since the outbreak of the global financial turmoil of August 2007.
Perhaps the other salient detail on this election weekend is the news this (Saturday) morning that “national champion” airline Alitalia is near to collapse and may have its license to fly revoked, at least this is the view of Vito Riggio, president of Italy’s civil aviation authority, as reported in Corriere della Sera.
“If something isn’t done soon, everyone must realize that Alitalia is on its last legs…. The authority will have no choice but to revoke the airline’s license “in two, maximum three weeks if it can’t show it can find cash to stay in business”
And – as if to add insult to injury – only this week the IMF revised down yet one more time their 2008 forecast for Italian GDP growth, on this occasion to a mere 0.3% , and (as we will see below) a steadily accumulating body of data now clearly suggest that Italy is already in recession, and may well have entered recession sometime during the last quarter of 2007. If confirmed this will mean that Italy will have been in-and-out of four recessions in last five years. So the real question we should be asking ourselves is not be whether Italy is in a recession, but when in fact she entered it, and even more to the point, when will she leave? Continue reading