Prostitution and Drugs Bring Italy Out of Recession

Recent news has stated that Italy is no longer in recession, as a result of a change in the way data calculations are made in the EU to illegal economic activities such as drug trafficking, prostitution, and alcohol and tobacco smuggling. Previously, the state of Italy’s economy was bleak following Prime Minister Matteo Renzi’s rise to power. Shortly after assuming the position, the Prime Minister led the country into a downward spiral. The EU has decided to include prostitution, drug trafficking, and other illegal forms of exchange in Italy in their calculations due to the fact that some European countries have legalized or decriminalized these activities, and thus to fairly compare the countries’ GDPs, all must include them. The black market activities has helped to raise the country’s GDP from a 0.1% decline for the first quarter to a flat reading according to the EU reading, which has helped Italy avoid a third recession in six years. This higher means that Italy will be entitled to less subsidies, it also has moved the country’s debt and deficits closer to the EU’s targeted levels. Additionally, by including black market activities in the country’s GDP, Italy’s debt to GDP ratio will be reduced from its current level of 132%, which is double the EU level. The finance ministry expects the country to have GDP showing growth by the year 2015. The new data confirmed a 0.2% decline in the second quarter, but GDP needs to contract in two consecutive quarters to be in recession.