Jan. 26 (Bloomberg) -- Italian consumer confidence held at a 16-year low in January as Europe’s debt crisis forced austerity measures that may help push the economy into a recession this year.
The confidence index remained at 91.6, matching the previous month, which was the lowest since January 1996, national statistics office Istat said in Rome today. Economists had forecast a reading of 92, according to the median of 16 estimates in a Bloomberg News survey.
Household confidence is slumping after the government implemented additional austerity measures that aim to eliminate the budget deficit in 2013 to shield Italy from the fallout from the debt crisis that sent the country’s borrowing costs to euro- era records. The 20 billion-euro ($26 billion) plan passed in December includes a cut in pension spending, a crack down on tax evasion and higher levies on fuel, leaving Italy with Europe’s highest gasoline prices.
The measures have helped bring down Italian borrowing costs since Prime Minister Mario Monti came to power in November, while they are adding to the country’s economic slowdown.
Italy may be in its fourth recession since 2001, after the country’s growth averaged 0.2 percent annually in the decade to 2010, compared with 1.1 percent in the euro area. The International Monetary Fund forecast on Jan. 24 that the economy will shrink 2.2 percent this year, compared with a 0.5 percent contraction for the euro area.
Monti said this week that his efforts have been “appreciated” by European colleagues. Still, many Italians have rejected his appeal to accept sacrifices. A wildcat strike by truck drivers this week has clogged traffic on Italian highways, disrupting Fiat SpA’s production and leaving some cities short of gasoline and food.
--With assistance from Giovanni Salzano in Rome. Editors: Andrew Davis, Dan Liefgreen
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