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Eurozone crisis

Italy's sovereign debt explodes as economy shrinks in 2013

Italy’s public debt hit a new high in 2013, soaring to a level not seen since the country’s statisticians began taking records. The debt exploded as Europe’s third-largest economy remained locked in recession.

Italy's sovereign debt surged to 132.6 percent of gross domestic product (GDP) last year, up significantly from 127 percent of GDP in 2012, according to latest data released by the country's National Statistics Institute (ISTAT) on Monday.

Within the 18-nation eurozone, only Greece had accumulated a higher overall debt mountain, ISTAT said.

The debt explosion was linked to a drop in Italy's 2013 GDP, which shrank an annual 1.9 percent, ISTAT added, thus continuing the country's deep two-year recession. In 2012, the eurozone's third largest economy had decreased by 2.5 percent, suffering from the fallout of the sovereign debt crisis in the currency area.

Italy remains locked in crisis

In spite of its economic weakness, Italy managed to keep its 2013 budget deficit down to 3 percent of GDP, which is exactly the limit allowed under European Union treaties. Moreover, the Italian economy slightly improved in the final quarter of 2013, growing by 0.1 percent.

Nevertheless, unemployment remained steep, hitting its highest level in 37 years in January with a jobless rate of 12.9 percent. Unemployment is especially rampant among young people under the age of 25, among which 42 percent were without jobs.

The new government of Prime Minister Matteo Renzi has pledged to tackle the jobs crisis with a package of reforms due to be made public later this month. The measures are expected to include cuts in payroll taxes, changes to strict labor rules and an overhaul of unemployment benefits.

uhe/ph (AFP, AP, dpa)

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