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Italy’s economy falls back into recession

According to latest official figures, Italy’s economy has fallen back into recession after contracting for two quarters in a row.

GDP, the value of all the country’s goods and services, shrank 0.2% in the second quarter of the year.

The surprisingly weak number follows a 0.1% contraction in the first quarter.

Economists consider two quarters of shrinking GDP means a country is in recession.

Italy's economy has fallen back into recession after contracting for two quarters in a row

Italy’s economy has fallen back into recession after contracting for two quarters in a row

At the end of last year the country appeared to be emerging from recession, growing fractionally in the last three months.

Since then the numbers have been getting worse.

The Bank of Italy said last month that GDP had contracted by 9% since the global financial crisis began in 2007.

Separate figures showed industrial output increased by 0.9% from May to June, the biggest increase in five months.

This latest unexpected contraction in GDP is a blow to PM Matteo Renzi, who came to power in February promising to reform and revive the economy.

However, the reforms have so far been limited to a tax break for low income workers.

Government projections for 2014 put economic growth at 0.8% this year, with a deficit of 2.6% of GDP.

Without a recovery, there is speculation the government may need another budget to keep the deficit below the EU’s ceiling of 3% of GDP.