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G7 host Italy dives deep into recession
2009-02-13
ROME (AFP) - Italy reeled on Friday from grim news it will bring to the table as the host of Group of Seven economic crisis talks, with data showing it is deeper in recession than expected and protesters taking to the streets. Italy, Europe's fourth-biggest economy, is host to the G7 talks on fighting the spiralling crisis, which begins with a working dinner Friday evening. The new official data showed that output fell to the lowest level since 1980 in the fourth quarter of 2008, at 1.8 percent down from activity in the previous quarter. This was after shrinking by a downwardly revised 0.6 percent in the third quarter. The worse-than-expected data -- economists surveyed by Dow Jones Newswires had forecast a 1.3-percent drop -- came as tens of thousands of people thronged a Rome square to protest against the economic crisis under the slogan "Not On Our Backs." The biggest trade union, CGIL, called the protest and a general strike to slam the government's response to the financial crisis, saying it exposed already vulnerable workers to further risk. Protesters -- mainly civil servants and metalworkers -- came to Rome from all over Italy, notably from the impoverished south of the country, but only some nine percent of the civil service workforce answered the strike call, according to the civil service department. "We should not have to pay for the mistakes of others, the banks the traders, those who profit off our backs," said Juan Luis Finkbein, a metalworker from northern Brescia. "I have no desire to go on temporary layoff, but the problem is that the crisis looks like it will affect every sector," Finkbein, who emigrated to Italy from Uruguay 10 years ago, told AFP. Problems at auto giant Fiat have been emblematic of the turndown, with sales in Italy falling 20 percent in the fourth quarter of 2008, prompting the company to call a string of temporary layoffs. Conservative Prime Minister Silvio Berlusconi, reacting to the new recession figures on Friday, said the "dimensions of the crisis are not yet fully defined," adding that "we should view it, and we do view it, with concern." In November, the Italian government launched a package of five billion euros (6.5 billion dollars) for 2009 to cope with the economic slump, but the opposition, unions and employers all criticised the plan as too modest to have any real impact. Last week, Berlusconi announced new measures worth two billion euros to boost the economy and help the auto industry, while tying the aid to keeping factories at home. The centre-left opposition Democratic Party will unveil an alternative recovery plan on Saturday, its leader Walter Veltroni said, "because the government has been totally absent and incapable of making any decision at a time when we need to breathe life back into the economy." Last week the International Monetary Fund warned that Italy's recession could stretch into 2010 "in line with the rest of the euro area, ... although its financial sector has remained relatively resilient." An analyst with US banking giant Citigroup warned in a research note to clients: "Looking ahead, no signs of a recovery are in sight. The slump in monthly indicators in December suggests that the carry-over effect on first-quarter growth is likely to be very negative." Alex Foti, an activist with EuroMayDay, a political day of action against precarity mostly in western Europe, said: "There is a shift from precarity to unemployment in Italy and the rest of Europe." Segments of society he called "outsiders -- young people, women, immigrants" -- will be the first to lose their jobs, he told AFP, adding: "The great recession is going to make it worse."
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