Four years after Italy slipped into recession, the country's statistics agency confirmed that it is has fallen on the same ground, refueling talks about the potential decline of the eurozone economy.
According to CBS News, the Italian statistics office revealed that the country shrank by 0.2 percent on a quarterly rate during the final quarter of 2018. The previous quarter recorded a 0.1 percent dip, which puts Italy on a two-time consecutive downward streak.
Experts have pointed at Italy's decline as one of the reasons why the wider eurozone experienced an economic slowdown last year. The 19-state eurozone only progressed by 0.2 percent in Q4 2018, fueling debates on whether or not the figures will affect global scales.
It was also suggested that Italy's recession may have been largely impacted by the decline in domestic demand. To battle the problems that the country is faced with, the government has announced its plans to promote spending and implement security payments so as to encourage the Italian economy.
However, the EU (European Union) Commission has been blocking Italy's spending plans. The Commission stressed that spending further could increase the country's already rising debt levels.
Some analysts previously suggested that one of the factors that led Italy into an economic crisis is the rightwing League party's coalition with the Five Star Movement, the anti-establishment party in the country.
Furthermore, Rome and Brussels have been at odds ever since the Commission started blocking Italy's plan to implement various tax cuts and increased spending. The battle raged on for months and resulted in Italy incurring additional debts.
Spectators and analysts are now waiting for the coalition to come up with a plan to pull out Italy out of recession. According to The Guardian, James Athey of Aberdeen Standard Investments said, "The growth forecasts on which the budget was based have already been blown out of the water and the eurozone growth continues to weaken. Italy is going to have to face up to some real problems."
For Deputy Prime Minister Luigi Di Maio of the Five Star Movement, Italy's recession further proved that it is necessary for a change in Europe's budget rules. He reiterated that a budget revamp will allow the country to reawaken and continue its path towards growth.
Aside from Italy's third recession in a decade, other factors are predicted to affect the eurozone's decline in 2019. These include the highly-anticipated Brexit on March 29 and the upset contraction of Germany as revealed by its Q3 2018 report.
