Italian economy slumps

The eurozone's third-largest economy, Italy, has seen yet another quarter of contraction. The slump was the biggest in about three years and heightened fears that the country might soon become another bailout candidate. Italy's economy contracted by 0.8 percent during the first quarter of this year, the national statistics office, ISTAT,reported on Monday. The decline was the worst since 2009 when Italy posted a staggering 3.5-percent slump in the year's first quarter. The 2012 first quarter dip in gross domestic product (GDP) meant the third decrease in three consecutive quarters, serving as strong proof that the southern European nation was still facing an uphill battle to wriggle out of recession. Bailout required? ISTAT officials said the most recent slump was caused by rapidly dwindling domestic consumption. Italian imports went down by 3.6 percent in the first quarter, while exports only dipped by 0.6 percent. European Commission estimates see Italy's economy contracting by 1.4 percent over the current year. The government of Mario Monti said it would stick to its austerity measures to regain some of the market confidence that had been lost in recent months. But analysts appeared unconvinced on Monday. "Quite obviously, Rome's resolve to reform the country has flagged again," Commerzbank economist Ralph Solveen told Reuters news agency. "This way, an Italian request for bailout action may only be a matter of time."