Italy is slipping further into a recession — its fourth since 2001 — official numbers from Istat showed Monday. Gross domestic product slumped 0.8% in the first months of the year compared with the previous quarter, making for the worst tumble in three years.
By contrast, Spain’s economy tightened 0.4%, according to its central bank.
The Italian economy is set to contract an additional 1.5% this year, according to the Bank of Italy. The Organization for Economic Cooperation and Development has predicted a 1.7% contraction.
Yields for benchmark 10-year Italian government bonds are up 26 points Monday to 6.03%.
Late Friday, the Moody’s rating agency said that Spain’s banking problem “is not likely to be a major source of contagion to other euro area countries, except for Italy.”
Its rationale? Italy and its banks have come to rely heavily on funding from the European Central Bank.
But there is still much working in Italy’s favor, especially when compared with Spain. Italian banks didn’t suffer from the same housing market cave-in that crippled its Spanish counterparts.
Italy’s unemployment rate is half that of Spain’s. Its borrowing costs are lower.
“In the past months, Italy has done, from a financial point of view, everything that needed doing to save itself,” said Italian Industry Minister Corrado Passera to a group of reporters Monday, according to the Wall Street Journal.