MILAN, Aug 9 (AFP): The Italian economy contracted in the second quarter, official data showed yesterday, adding to a deepening sense of gloom about the Eurozone economy amid a flurry of bad news for the 15-nation bloc.
Italy is the first Eurozone country to reveal figures for the second quarter and a 0.3-per cent quarter-on-quarter contraction underlines fears that a severe slowdown, even a broad European recession, could be looming.
European Central Bank (ECB) president Jean-Claude Trichet, announcing unchanged interest rates last week, recognised evidence of weakening of the Eurozone economy in comments which sent the euro into a tailspin.
"These are the first GDP figures to come out and they anticipate a general setback in Europe," said an analyst at French investment bank BNP Paribas, Caroline Newhouse-Cohen, commenting on the Italian figures.
"Even if Italy is suffering from a more unfavourable situation than Germany or France, we have every chance of seeing a contraction of about 0.3 per cent or more, in the whole of the Eurozone."
She added: "Even the German GDP, expected next week, is likely to show a fall of 0.8 per cent."
A recession is defined as two consecutive quarters or more of economic contraction.
The euro fell sharply to 1.5033 dollars in late European trading, partly as a result of the Italian data, compared with 1.5321 dollars in New York last week.
The Organisation of Economic Cooperation and Development (OECD) also signalled Friday that growth in the seven biggest economies in the world was set to weaken further and pointed to a mixed outlook for big emerging economies.
The OECD said its composite leading indicator, which tracks developments across economies internationally, "indicate a continued weakening outlook for all the major seven economies" in June.
It also said: "The latest data for non-OECD member economies tentatively point to expansion in China and Brazil and a downturn in India and Russia."
The indicator for all 30 countries in the OECD fell by 0.6 points in June and was a full five points lower than in June last year, the OECD said.
The Italian statistics agency Istat said the economy had contracted by 0.3 per cent in the second quarter compared with the first quarter.
