Italy: Economic growth improves moderately in Q2 on domestic demand and exports
September 10, 2013
In the second quarter, GDP fell a seasonally and working-day adjusted 0.3% over the previous quarter, which was slightly below the 0.2% decrease reported in the preliminary estimate released by the National Statistics Office (ISTAT) on 6 August. The fall marked an improvement over the 0.6% drop seen in the first quarter. However, it marks the eighth consecutive contraction in GDP. On an annual basis, the economy contracted 2.1%, which was up from the 2.4% fall recorded in Q1.
Revised figures showed that the slower contraction in Q2 reflected an improvement in domestic demand as well as an expansion in exports. In Q2, domestic demand decreased 0.3%, up from the 0.8% contraction recorded in the first quarter. In addition, fixed investment improved from a 2.9% contraction in Q1, to 0.3% contraction in Q2.
On the external side, exports of goods and services expanded 1.2% in Q2, which contrasted the 2.1% rise recorded in the previous quarter. In addition, imports fell 0.3% in Q2, which was up from the 1.4% drop seen in the first quarter. As a result, the external sector's net contribution to overall growth increased from minus 0.9 percentage points in Q1 to minus 0.3 percentage points in Q2.
The Bank of Italy expects a 1.0% contraction in GDP this year and a 0.7% rise in 2014. Panelists expect the economy to contract 1.1% in 2013, which is down 0.1 percentage points from last month's forecast. The panel expects GDP to expand 0.5% in 2014.
Author: Dirina Mançellari, Senior Economist