Daily Archives: August 12, 2014

What the world saw last Thursday evening was an American president torn between personal preferences and cold reality. The result is a US that is once more moving towards greater military involvement in Iraq – but only reluctantly and incrementally.

Describing himself as someone who ran for office “in part to end our war in Iraq and welcome our troops home”, Barack Obama announced a policy of dropping supplies to save thousands of members of the Iraqi Yazidi religious minority – and authorised but did not order air strikes on advancing insurgents from the Islamic State of Iraq and the Levant (known as Isis). Continue reading »

The latest data release of the Italian second quarter gross domestic product shows that the economy shrank 0.2 per cent, confirming that the country is back in recession. This is worrying in several ways. It brings GDP below the 2000 level, making Italy the worst performer since the start of the European monetary union. The slowdown in exports, the only component of GDP that had grown in the recent past, shows the underlying fragility of the country’s economy and its lack of competitiveness. The negative result, together with the very low level of inflation, makes debt sustainability more difficult to achieve, thus raising new concerns in financial markets.

The most worrying aspect, however, is that the recent number proves once again how wrong economic forecasts have been about the Italian economy. At the end of last year, the consensus of Italian and international institutions projected the 2014 GDP growth at about 0.6 per cent. The Italian government courageously aimed at 0.8 per cent. These forecasts were revised down earlier this year – and lately by the International Monetary Fund – to 0.3 per cent. The last release will probably induce a further correction towards zero. Continue reading »