Italy: Economic recovery slows slightly in Q3
November 30, 2021
GDP growth lost some steam in the third quarter, ticking down to 2.6% in seasonally-adjusted quarter-on-quarter terms, from 2.7% in the second quarter.
Private consumption growth waned to 3.0% in Q3 following the 5.0% expansion logged in Q2, weighing on the economy’s performance. Moreover, fixed investment growth fell to 1.6% in Q3, marking the worst reading since Q4 2020 (Q2: +2.4% s.a. qoq), mainly due to more sluggish capital spending on dwellings and buildings. More positively, government spending rebounded, growing 0.1% in Q3 (Q2: -0.7% s.a. qoq).
Exports of goods and services increased 3.4% in the third quarter, which matched the second quarter's reading. Conversely, growth in imports of goods and services moderated to 2.1% in Q3 (Q2: +2.5% s.a. qoq), marking the worst reading since Q2 2020.
On an annual basis, economic growth slowed markedly to 3.9% in Q3, down from the previous quarter's 17.1% growth.
On the outlook for Q4, Loredana Maria Federico, chief Italy economist at UniCredit, commented:
“We expect to see a moderation in the pace of growth in Q4 2021. While we assume that the latest achievements in the vaccination campaign should prevent new severe restrictions in the coming months, growth in services activity is likely to slow given lower demand, as the reopening bump observed since late April peters out and outdoor social activities are reduced. A further slowdown in manufacturing activity is also projected towards the end of the year amid slowing global trade and supply-side constraints.”
Author: Frederico Teixeira de Abreu, Junior Economist