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Italy's debt level increased in 2011

Italy's debt rose again in 2011, while its economy struggled to grow.

Its total public debt now amounts to 120.1% of the annual output of its economy, up from 118.7% in 2010, the statistics agency Istat said.

But Italy's annual budget deficit improved a bit, running at a rate of 3.9% last year, down from 4.6% in 2010.

The economy, meanwhile, grew just 0.4% in 2011, brought down by a recession in the second half. In 2012, the economy is expected to contract by 0.4%.

To compare, Germany's ratio of debt-to-GDP (GDP measures the size of its economy) is about 81% while Greece's is about 170%.
Austerity programme

Italy is considered to be in recession, which is usually defined as two successive quarters of negative growth, after its economy shrunk in the last six months of the year. However, for the year as a whole the country's gross domestic product grew 0.4% in 2011, Istat said.

Italy has been hit hard by the eurozone debt crisis; soaring borrowing costs brought down the government of Silvio Berlusconi in November.

Mario Monti took over at the head of a government of unelected technocrats, and has since passed a series of austerity reforms of tax increases, spending cuts and pension reforms aimed at balancing Italy's budget by 2013.

Meanwhile, economic activity for the rest of Europe appears to still be subdued.

The unemployment rate in the 17-nation eurozone continued to rise in January, hitting another record high, official Eurostat figures showed on Thursday.

The Netherlands also entered recession in the fourth quarter of 2011.

And Germany - Europe's largest economy - had its first quarter of negative growth since 2009 with a decline of 0.2%, compared with the previous quarter.

BBC News

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