Italy’s economy set to shrink by 2%

Italy’s economy will shrink by about 2% in 2012, though signs of recovery could start to appear at the end of the year, Bank of Italy governor Ignazio Visco has said.

Mr Visco had previously expected a 1.5% contraction in Italian GDP against a government forecast of -1.2% and a 2.4% decline seen by employers’ lobby Confindustria.

Italy has been in recession since the middle of last year, weighed down by austerity measures passed by the government to balance the budget and rein in the country’s €1.95 trillion debt.