Italian economy slides into recession

MILAN — Italy slid into a recession as Europe's fourth-largest economy posted negative growth for the second consecutive quarter, the national statistics office said Friday.

The ISTAT statistics office said gross domestic product in the July-September period contracted by 0.5 percent compared with the previous quarter and by 0.9 percent compared with the same quarter in 2007.

It is Italy's worst recession in 16 years, ISTAT said. The economy shrank a revised 0.4 percent in the second quarter.

ISTAT cited a decrease in industrial output as well as activity in the agricultural and services sectors. Industrial production in Italy is down 5.3 percent this year while retail is down 3.4 percent.

Italy's economy has been hit by slowing consumer spending in the face of rising fuel and food prices. The Rome-based ISTAT said consumer prices are up 4.1 percent and that consumer spending for the year would grow just 0.1 percent if it is assumed to remain unchanged for the rest of the year.

Before the release of the official data, Italy's main business lobby Confindustria had already declared Italy in a recession.

Automaker Fiat Group SpA, the country's biggest industrial concern, has slowed production and has warned that earnings could drop 85 percent next year in a worst-case scenario.

Italy's economy has lagged behind the rest of Europe for more than a decade, plagued by huge public debt and low labor productivity.

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