Confindustria warns of 'high uncertainty' in economy

Italy's industrial employers' confederation warned of "heightened uncertainty" amid the country's "deep recession" in a report Thursday entitled 'The Challenges of Economic Policy'. "The Italian economy remains in a deep recession and signs of reversing the trend are not strong," said the study from Confindustria's research center. "Uncertainty remains high," it added, not only in the global scenario, but also regarding the next elections, given that "it is still unclear what the electoral system will be when people go to vote". The current administration of Italian Premier Mario Monti, brought in to replace the government of Silvio Berlusconi amid a peak in the euro crisis in November, is composed of unelected technocrats, mostly with economic and finance backgrounds. Monti insists his political career will end next spring when elections are planned. According to the report Thursday, Italians will have to wait just as long for an economic recovery to kick in as Confindustria forecast worse GDP numbers for 2013 than previously reported. The lobby confirmed its June predictions that 2012 GDP would dip by 2.4%, but adjusted 2013 numbers from a 0.3% drop to 0.6%. "In essence, the recession is not letting up and an economic recovery will be pushed back to next spring," said the study. All told, the effects of the current crisis have been more devastating to GDP than World War I, the group said. "Up to now the consequences of the crisis on Italian GDP, down 6.9% since its peak in the third quarter of 2007, have had worse effects than the First World War," said the research center. "Even though they have been much less destructive than World War II (when GDP dropped 45%), the effects of the current crisis will likely last longer, given the different rates of recovery". Italy must therefore "work harder" in order to pull out of the economic crisis, the president of Confindustria said. "We all need to roll up our sleeves and work harder," said Giorgio Squinzi. He added that the government is capable of doing more to fix the economy. "We are trying to put together a proposal with labor union leaders, whom I find to be greatly aware of the gravity of the situation," he said, especially in terms of unemployment. The report also said that Italy recently added over 750,000 people to the list of unemployed in the course of one year. From the second quarter of 2011 to the same period in 2012, there were 758,000 more out-of-work people than before, the report said. It added that the country's unused workforce, a combination of the unemployed and underemployed, will grow from 12.8% to 13.9%. But silver linings exist. The report cited Germany's approval of the new European bailout fund as evidence of improved EU cooperation in tackling the euro crisis. "The climate in the eurozone has decidedly changed," said Luca Paolazzi, director of the lobby's research center. He also called the German Constitutional Court's approval of the ESM fund "very positive", a decision whose message "goes beyond" the implementation of the plan itself. Holding back recovery, however, is the "global slowdown", with a "drop in global trade" and the "sudden halt in emerging markets," he said. Furthermore, "the causes of the crisis remain," with "the credit and housing bubbles" at the top of the list. Paolazzi said that combatting high unemployment and putting public finances in order were next in line. Regarding foreign trade, the study estimates that "exports of goods and services will grow by 0.7% in 2012 and 1.2% in 2013". Imports will fall by 7.7% this year and begin to rebound by 0.9% in 2013, the report said.