ROME (Italy) — Three pieces of bad economic news in six days are hard for many prime ministers to take. It is even harder if you are a battered premier who was forced to briefly resign last month after a poor performance by your coalition in regional elections. But if your name is Silvio Berlusconi and you were elected after promising Italians a miracle, it is perhaps too much to absorb.
Let’s recall what happened. On May 12 preliminary data released by the statistics office ISTAT said Italy’s gross domestic product (GDP) shrank 0.5 percent in the first quarter of 2005. That makes two quarters in a row, since Italian GDP shrank by 0.4 percent in the fourth quarter of 2004.
On May 17 Domenico Siniscalco, Italy’s economy minister, says the government is ready to cut the country’s 2005 economic growth, adding that the deficit could violate European Union limits and implicitly admitting government’s forecasts were overly optimistic.
The next day, the OECD publishes its latest economic survey of Italy asking for “further structural measures” in order to “reach budget targets in 2005.” The organization “projects further falls in 2005 and 2006 on the basis of announced policy measures, with the public-sector deficit exceeding 3 percent of GDP in 2005, more so in 2006.”