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Italy's economy likely to shrink in 2Q
2019/6/21 15:40:44 Source:Xinhua

by Alessandra Cardone
ROME, June 20 (Xinhua) -- Italian economy is expected to shrink in the second quarter of the year, while the working-age population is set to dwindle in the medium term, the country's statistical agency said on Thursday.
Unveiling the "State of the Nation" annual report before parliament, Gian Carlo Blangiardo, the president of National Institute of Statistics (ISTAT) explained there was a "relatively high probability" for the country's gross domestic product (GDP) to contract in the current second quarter.
"The probability of a contraction in GDP in the second quarter is relatively high: 0.65 on a scale of zero for economic expansion to one for economic contraction," Blangiardo said.
ISTAT forecast a 0.3 percent annual growth for the whole 2019, as such confirming a projection made by the Central Bank of Italy in early June.
In the first quarter of this year, Italy expanded by a mere 0.1 percent compared to the previous three months, data showed in May. This allowed the country to exit a technical recession it had entered into after two consecutive negative quarters in the second half of 2018, yet it was below expectations.
"Household consumption, despite a marginal slowdown compared to 2018, will represent the main component sustaining such growth (in Q2 2019)," Blangiardo explained to lawmakers on Thursday.
This consumption trend would be supported by a wage increase and -- "to a limited extent" -- by the basic income scheme passed by the government at the beginning of this year.
"By contrast, investment seems likely to decelerate significantly (in 2019), due to the persistent uncertainty over domestic and international macroeconomic environment," the agency chief added.
In its "State of the Nation" annual report, ISTAT usually provides an overall analysis of the most recent features and changes going through the Italian society and economy.
In this edition, besides the limited chances of growth spotted by analysts, a key issue was linked to the growing incidence of elders on the overall population, and to a consequent significant drop in working-age people over the next 30 years.
"ISTAT projections show a marked decrease in population, and a significant transformation of its structure by age between now and 2050," the report said.
Such changes would "gradually reduce the working-age population in the medium term" with possible negative effects on the country's growth potential, and a significant impact on its production process and the composition and quality of human capital, said the agency.
"In 2050, the share of 15 to 64-year olds seems likely to be destined to fall to 54.2 percent of total population, about 10 percentage points less than today," said the report.
"This would be equal to over 6 million fewer people feeding the working-age population," it said.

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