Sunday, August 14, 2016

Italy's economy failed to grow between April and June as the country struggled with its creaking banking sector. GDP growth shrank to 0% in the second quarter compared to 0.3% in the first quarter.Germany's economy also slowed in the second quarter, albeit less markedly than had been expected.  Europe's largest economy expanded by 0.4%, down from 0.7% in the first quarter, but above forecasts of 0.2%. Overall, a second estimate of GDP across the eurozone confirmed that growth halved to 0.3% from 0.6% in the first three months of the year.GDP also fell across the 28-nation European Union to 0.4% from 0.5% between the first and second quarters.  In Italy, analysts had expected GDP to grow by between 0.1% and 0.3%.Italian Prime Minister Mario Renzi, is battling to reduce the bad debt in its banking sector, which is currently buried under €360bn worth of bad loans. Monte dei Paschi di Siena, Italy's third largest bank and the world's oldest lender, is saddled with €46.9bn of bad debt.  Alberto Bagnai, economic policy professor at the University of Chieti-Pescara, said: "There is no way to solve the banking problem without economic growth. If the whole nation doesn't start earning more it can't pay back its debts - public or private." The government expects the country to grow by 1.2% this year. However, the International Monetary Fund recently reduced its economic growth from 1.1% to 1%.The new data means that growth in the Eurozone's three biggest economies - Germany, France and Italy - has either slowed or completely stalled between the first and second quarters. France recorded no growth between April and June after GDP rose by 0.7% in the first quarter, boosted by business from the Euro 2016 football tournament.

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