Italian economy to shrink 2.0% in 2012
(ROME) - The Bank of Italy on Tuesday downgraded its official forecasts for the recession-hit economy, saying that gross domestic product (GDP) will shrink by 2.0 percent this year.
The central bank said Italy's recovery would "depend on the cohesion shown by the European Union and on the normalisation of the financial markets."
Implementation of the measures agreed at an EU summit last month to help vulnerable eurozone economies will be "crucial," it added.
The Bank of Italy also said the unemployment rate would continue rising to more than 11 percent next year from 10.1 percent currently.
Prime Minister Mario Monti's reforms will help boost the growth potential of the economy "above all in the medium term," it added.
It praised the reforms saying they had "introduced structural changes."
Bank of Italy governor Ignazio Visco earlier this month anticipated the downgrade in the forecast from a contraction of 1.5 percent and called for a "new Italian spirit" to tackle the debt crisis.
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