Compared to Q1 2011, Italian Final GDP Print Weaker than Expected
THE TAKEAWAY: Italian growth was weaker than expected in Q1 2012 -> Italian banks struggle to avoid requesting bailout -> EURUSD pares earlier gains
Italy’s final report of economic growth in 2012’s first quarter came in as expected compared to Q4 2011, but a bit weaker than expected compared to this time last year, the Italian stats bureau said today. Gross domestic product shrank 0.7% from Q4 2011, and also shrank 1.4% on the year as opposed to 1.3% expected.
The report came as Italian banks scrambled to refinance faulty loans and avoid having to ask the European bailout mechanism for assistance. Growth in Italy has ground to halt as the nation attempts to avoid unsustainable debt levels. Weakness in the Italian banking sector would put further pressure on the EU refinancing mechanisms and the Euro, already stretched by Greek loans and a newly-approved bailout of Spanish banking institutions.
The Euro weakened slightly ahead of today’s release, although the single currency remained up against the US Dollar on the day.
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