Italians brace for frugal holiday season amid financial crisis

Special Report:Global Financial Crisis

by Huang Haiqing, Yang Aiguo

ROME, Dec. 10 (Chinese media) -- Despite early promotions

and discounts by retailers this year, most Italian consumers are likely to

choose to hold their wallets tighter for the upcoming Christmas and New Year

holidays, the country's consumer groups said.

Compared with the same period last year, Italians

would spend 5 percent less on food, 10 percent less on toys, and 20 percent

lesson clothing and gifts for the two holidays, the Italian National Consumers'

Association predicted.

Household spending on decorations would drop by as

much as 25 percent, it said.

Total consumer spending during this year's Christmas

is forecast to be 6.5 billion euros (8.4 billion U.S. dollars), nearly a drop of

two billion euros compared with previous years.

As in many other European countries, the financial

crisis is not only taking a heavy toll on the consumer market in Italy, but has

also brought about a widespread psychological impact on consumer sentiment and

spending.

According to Italian socio-economic think tank

Censis, over 70 percent of Italians are worried that the financial turmoil would

have a direct impact on their lives.

An export-oriented economy, Italy saw the business

confidence index in the processing sector drop to 72.2 points, the lowest since

August 1993.

The latest figures from the Italian national

statistics agency Istat showed that industrial production in the first 10 months

of this year fell 2.9 percent year-on-year and the economy is sliding into a

"technical recession."

The country's 3rd quarter GDP dropped 0.5 percent

from the previous period, with a second straight quarter of negative growth,

Istat said.

Italy's employers' confederation, Confindustria,

predicted that the contraction is most likely to continue in the 4th quarter and

growth could drop 0.8 percent.

A recent report by the Organization for Economic

Coperation and Development (OECD) said Italia's economic slump could last till

the end of 2009.

In a bid to stabilize the domestic market and boost

consumer confidence, Italy approved an 80-billion-euro package last month to

help reduce the impact of the global financial crisis on families and firms.

The measures included providing liquidity guarantees

for Italy's financial services providers, tax breaks for businesses, subsidies

for low-income families and an increase in public investment in infrastructure.

Italian Economy Minister Giulio Tremonti said the

package will not weigh on the state budget or public debt and that Italy would

remain within the eurozone deficit limits.

However, Confindustria maintains that the stimulus

package could not solve the root problem of the Italian economy, which is in

dire need of structural reforms.

Meanwhile, trade unions are mulling fresh strikes in

the hope that the government could take more effective measures to protect the

interests of workers.