The Italian recession-hit economy showed the sharpest contraction for more than 30 years in 2008, shrinking 1.0 percent as exports and investment dried up, the statistics office Istat said on Monday. The figure was the worst performance since 1975, the year it shrank 2.1 percent due to a petrol crisis, the agency said, and worse than the 0.6 percent contraction the government had forecast.
Growth was 1.6 percent in 2007, it said in a revised estimate. The country's budget deficit represented 2.7 percent of gross domestic product (GDP) last month, it added - below the three-percent limit stipulated by European Union rules.
Italy entered a recession - defined as two quarters of negative growth in a row - in the third quarter of last year. Inflation meanwhile stabilised at 1.6 percent in February compared to the figure for February 2008, the same level as in January, after falling from a high point of 4.1 percent last summer because of the global downturn.
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