Italy’s economy is downgraded after reports show that the GDP is set to shrink, sending related shares and exchange traded funds (ETFs) down.The Italian government last week also downgraded its outlook on the economy, predicting that GDP will contract 4.2% this year. A waning global demand has halted the world’s fourth-largest economy, with public debt and short-term indicators signaling a long retraction, reports The Wall Street Journal.

Meanwhile, the style factor is not compromised in Italian design, as designers are set to weather the recession with clean, timeless design that can stay the decade. Sensible and sustainable were the mantras for the 2,700 manufacturers that launched collections to more than 300,000 showgoers at the Milan Fairgrounds and at independent exhibitions all over the city, reports David A. Keeps for The LA Times.

Italian carmaker Fiat is set to grow, as they take  a stake in Chrysler LLC. Fiat may spin  off its automobile division following a purchase of General Motors Corp.’s European unit, sending the Italian carmaker’s shares to a seven-month high in Milan. Fiat already plans to take control of Chrysler, based in Auburn Hills, Michigan, in a deal announced by President Barack Obama last week, reports David Risser and Steve Rothwell for Bloomberg.

• iShares MSCI Italy Index (EWI): down 4% year-to-date

Tags: Europe, EWI, Global ETFs, Italy, Obama