Italy extends sluggish exit from recession

Italy's economy expanded slightly in the second quarter of the year, extending the country's sluggish emergence from recession, official data showed Friday.

The national statistics office ISTAT said gross domestic product (GDP) for the April to June period was 0.2 percent higher than in the first three months of 2015, and 0.5 percent higher than in the second quarter of last year.

Most analysts and the Bank of Italy had been counting on quarter-on-quarter growth of 0.3 percent.

But a spokesman for the economics ministry said the figures were in line with official expectations. "That is two consecutive quarters of growth after three in recession," he said. "But the country can do better: structural reforms and economic policy will help growth accelerate."

Raj Badiani, senior economist at IHS Global Insight, said the outlook for Italy remained precarious with low energy prices, the weak euro and loose monetary policy in the eurozone having provided a temporary boost which would not necessarily be sustained.

"The economy staggered out of yet another recession in the latter stages of 2014, while the anticipated resumption of growth in the first half of 2015 was disappointing given it was the first gain since mid-2011, and was a lacklustre return from extremely supportive external factors," Badiani said in a note.

Unemployment at over 12 percent of the labour force continues to dampen a consumer-led recovery in Italy and many observers see the country's longer term prospects as being blighted by an array of structural factors, ranging from relatively high labour costs to stifling bureaucracy and corruption which act as barriers to inward investment.