MILAN: The Italian economy contracted in the fourth quarter of 2018, plunging the country into a technical recession, official data showed Thursday.
The 0.2 percent contraction of Italy's economy -- following a 0.1 percent fall in the third quarter -- will put pressure on the populist government in the eurozone's third largest economy
The 0.2% contraction -- following a 0.1% fall in the third quarter -- will put pressure on the populist government in the eurozone's third largest economy, which took power in June on the back of big-spending electoral promises.
Italy's Prime Minister Giuseppe Conte had anticipated the bad news on Wednesday during a business conference in Milan.
"Analysts tell us we'll likely still suffer a bit at the start of this year," he said, pointing the finger at a slowdown in China and Germany which are hurting Italian exports.
"But all the elements are there to recover in the second half," Conte added.
The coalition government of the anti-establishment Five Star Movement (M5S) and the far-right League party was forced to water down its ambitious and costly budget in December to avoid being punished by the European Commission and the financial markets.
A slowdown will make it even harder to follow through on expensive vote-winning measures both parties promised their bases, from a reform to the pension system and income support for the poor.
Thursday's data "reflect a marked worsening of the industrial sector's performance, and of a negative contribution of agriculture," national statistics institute Istat said.
The institute had earlier released December's unemployment rate, which fell to 10.3% from 10.5%, a positive sign. The jobless numbers rose 0.1% for young people aged 15 to 24, however, bringing the rate to 31.9%.