Italy plunges into recession as virus bites

Italy posted a record economic contraction on Monday, August 31, as household spending and investment crashed during the country's coronavirus lockdown, driving the eurozone's 3rd largest economy deep into recession.

The country's gross domestic product (GDP) fell by 12.8% in the 2nd quarter compared to the previous quarter and by 17.7% versus the same period last year, national statistics agency Istat said.

"The full estimate of the quarterly economic figures confirm the exceptional extent of the drop in GDP in the 2nd quarter, due to the economic effects of the health emergency and the containment measures adopted," Istat said.

The contraction was even worse than predicted in July, when Istat estimated a 2nd quarter drop of 12.4%.

A recession is commonly defined as two consecutive periods of a quarter-on-quarter drop in GDP.

Italy's economy shrunk 5.4% in the 1st quarter.

In the 2nd quarter, household spending fell by 11.3% compared to the 1st quarter, while exports plummeted 26.4%, the agency said. 

Italy, the first European country to be hit full force by the coronavirus outbreak, went into total lockdown in early March as COVID-19 tightened its grip on the country.

The peninsula is set to suffer its worst recession since World War II this year, with experts estimating GDP to plummet between 8% and 14%.

The eurozone economy is predicted to contract by a record 8.7% this year, with mass unemployment and other dire consequences still very much a possibility. –