Business Morale in Italy Hits a Low Not Seen Since '91

Italian business confidence fell in Dec. to its lowest level since the index began in '91, research center ISAE said recently, indicating Europe's fourth-largest economy is likely to fall into a deep recession in 2009. ISAE said business confidence plummeted to 66.6 from 71.6 in Nov., as the outlook for orders and production among companies turned significantly more pessimistic. The fall bolsters some economists' views Italy's economy in 2009 will register the worst recession since World War II. One economist of BNP Paribas SA said he expects Italian gross domestic product to fall 2.4% in 2009. ISAE said companies continue to cite difficulty in receiving loans from banks, as strain from the int'l. financial crisis spreads throughout the European banking sector. Italy fell into a recession in the 3rd-Q of 2008. During the past few months, the Italian government and central bank have been calling for Italian banks to continue lending to each other and to businesses. Prime Minister Berlusconi's government will slash its 2009 GDP forecast to around -1%, from a September prediction of +0.5%, at one of its next cabinet meetings in Jan., a government official told Dow Jones Newswires recently.