Economic Growth GDP Comparison: Italy

Economic Growth

GDP Comparison: Italy vs. The United States

The global economic crisis has been affecting almost all of the nations of the developed world. However, despite the fact that the source of the downturn is largely thought to have begun in the United States credit market, all of the countries of the European Union have become mired in the recession more quickly and more deeply than the nation from which the crisis originated (Pfanner 2009)."The economy of the 16 countries sharing the euro currency declined by 1.5% in the fourth quarter, according to the European Union's statistics office. That is even worse than the 1% decline in the United States economy during that period, compared with the previous quarter" (Pfanner 2009). On an annualized basis, "the 1.5% decline in output would amount to a drop of roughly 6% -- a significantly bigger fall than the 3.8% annual rate of contraction in the United States during the fourth quarter" computed in a similar fashion (Pfanner 2009).

While the economic powerhouse that was the EU has been reeling as a whole, one of the worst-affected countries is Italy (Pfanner 2009). Italy's fourth quarter output contracted by 1.8% (Pfanner 2009). Even more disturbingly, the forecast for Italy's gross domestic product (GDP) in 2009 is projected to contract by 2.5% rather than the previously anticipated 0.8%. "The international crisis has hit... An economy that was already weaker than the others," in the EU particularly hard (Italy 2009 GDP to shrink 2.5 pct, 2009, Reuters). Nations that experienced the most rapid growth from a lower point of economic development such as Italy, Spain, and Greece, have suffered the most in recent months. Tens of thousands of workers have been marching through the streets of the Italian capital "snarling traffic and demanding action to ameliorate the crisis" (Pfanner 2009).

According to the U.S. Bureau of Economic Affairs, the fact that the United States is in 'less bad shape' than the European Community nations such as Italy should not be a source of consolation. The "real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 3.8% in the fourth quarter of 2008.... [a]sharp slowdown in finance and insurance, a further contraction in construction, and a deceleration in durable-goods manufacturing were the leading contributors to the economic slowdown" (Overview of the U.S. Economy: Perspective from the BEA Accounts, 2009, BEA). Still, Europe is experiencing its worst economic downturn since the Second World War. Its more precipitous decline contradicts initial economic expectations that the European Union might be buffered from the crisis.

European home prices remained more durable than in the United States and European consumers have cut back less on their spending. The problem is that the European export industry has been suffering. While the more developed nations of Europe have taken more aggressive measures to inject capital into their economies and pursued more aggressive stimulus plans than the United States, poorer economies cannot afford to do so and still adhere to the policies of the European Union regarding the euro.