France, Germany and Italy are the top three economies within the euro zone and second quarter outlook are bleak as sentiment is low. The reports, all released Thursday, combined with a report a day earlier that German corporate sentiment fell to a record low in March, says Paul Carrel for Reuters on International Herald Tribune.
Household borrowing has stopped and business lending has slowed down since earlier this year. Many are anticipating a rate cut sooner than the proposed 0.50% cut currently set for April.
The country’s business lobby Confindustria also came out with some bearish figures, saying that it expected GDP to fall 3.5% this year. It fell 3.3% in the first quarter, reports Jennifer Clark for The Wall Street Journal. That’s worse than the previous forecase from the government for a 2% contraction.
Overall, the picture is a weak economic environment and the government must step in soon. Although sentiment and business morale was reportedly low in Italy, Forbes rated Italy as #31 for the best countries to do business.
Reasons include the diversified industrial economy, manufacture of high-quality consumer goods produced by small- and medium-sized enterprises, and a sizable underground economy making up around 15% of GDP.
- iShares MSCI Italy Index (EWI): down 17.8% year-to-date; up 11% for one week
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