Will Italy follow Spain with economic crisis? That is the big question looming around many economists around the globe. Could Italy be the possible next candidate for receiving the bailout, after Spain ? The question has been circling around as Italy’s economy numbers fell sharply.
The concerns were echoed by none other than Italian Prime Minister himself. “There is a permanent risk of contagion,” Mario Monti was reported as saying at a weekend conference near Venice. “That is why strengthening the eurozone is of collective interest.”
Economic numbers have also been indicating that the country might be heading for a deep recession. Italy’s government on Monday officially confirmed that the country’s recession is significant. The economy has seen contraction at a quarterly rate of 0.8 percent in the first quarter of the year. This is said to be the worst contraction in the past three years. Many feel that the rate is alarming and is actually double Spain’s rate.
The news has seen spiralling reactions around the global markets. Most of the Asian indices closed in red, as the news started flowing in. The Nikkei fell over 1.3%, while Kospi and Hang Seng also closed in red. Indian benchmark indices also reacted sharply on Monday, shedding the gains made earlier during the day.
The Euro has seen a decline with the series of news flows. The currency fell to 1.2489 against the US Dollar.