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Business

Italy economy shrinks further, but output picks up

Fresh statistical data from Rome have revealed that Italy has not yet been able to turn the corner on recession. Gross domestic product contracted further, but industrial output provided a sign of hope.

The Italian economy contracted by another 0.2 percent in the second quarter of 2013, the national data agency, Istat, reported on Tuesday. That's less than analysts had expected, adding to hopes that the eurozone's third-largest economy might soon gain momentum despite a renewed fall in gross domestic product.

The latest shrinkage followed a 0.6-percent GDP decrease in the first the months of the year, the agency said. In a year-on-year comparison, the economy shrank by 2.1 percent in June.

Labor Minister Enrico Giovanni insisted there were signs of a pickup later in the year to end the longest period of recession in the country since World War Two.

Squaring the circle?

"In the third and fourth quarters we may at last see the GDP slip into the positive and be able to finally say recession is over," the minister said in a statement.

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In data supporting his hopes, Istat announced that industrial output in the country increased in June, with production up by 0.3 percent month-on-month.

But political turmoil in Italy threatens to derail any fledgling recovery, following last week's conviction of center-right leader Silvio Berlusconi on charges of tax fraud. Prime Minister Enrico Letta, who took office in April at the head of a broad left-right coalition, faces the daunting task of trying to stimulate the economy while keeping a rein on the nation's strained public finances.

hg/ipj (dpa, Reuters, AFP)

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