Italy No Longer In A Recession Thanks To Hookers And Drugs


Italy is officially out of its recession and the nation has hookers and drugs to thank for it.

On Wednesday the European Union announced new data calculations that will take into account illegal economic activities as a measure of a country’s GDP. By adding revenue from things like prostitution, drugs and black market sale of cigarettes, Italy was able to avoid sinking into another recession.

The new sources of revenue helped to push Italy’s first-quarter GDP from flat to a rise of 0.1 percent. Though the economy still contracted in the second quarter by 0.2 percent, the new calculations mean that Italy did not decline for the two consecutive months needed for an official recession.

As AFP noted, the changes to GDP calculations are meant to foster a more direct comparison between countries whether or not they have legalized things like prostitution and drugs. Black market revenues are expected to boost Italy’s debt to GDP ratio, which is currently two times the EU ceiling of 60 percent.

Things had been looking bleak for Italy after Prime Minister Matteo Renzi came to power in February vowing to revive the economy. Just a few months later, the country appeared to be headed back into a recession with a downswing in the second quarter.

Some claimed that Renzi wasn’t doing enough to revive the Italian economy.

“If you compare it to a country like Spain, which underwent a huge amount of austerity but at the same time carried out labor market reforms, Italy… hasn’t done as much and you see the difference in growth rates that are starting to come through,” Hetal Mehta, European economist with Legal & General Investment Management, told the BBC.

On Wednesday, Italy’s cabinet approved a 2015 budget that included plans to increase borrowing to slash taxes by 18 billion euros.

The tax cut would be “the biggest ever done in the history of the Italian Republic,” Renzi said in a press conference.

“This is a great, great, great change. It’s a budget which aims to expand and be counter-cyclical in a moment of difficulty,” he said.

It seems that adding hookers and drugs to the economic equation may not help Italy avoid another recession, as experts believe the economy will contract again in the third quarter.

[Image via Reuters/RT.com]

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