Italy: Economy accelerates in Q3
December 1, 2016
In Q3 2016, Italian GDP grew 0.3% over the previous quarter in seasonally- and working-day adjusted terms, according to detailed data released by the National Statistics Office (Istat) on 1 December. The reading matched the preliminary estimate and came in above the revised 0.1% rise in Q2 (previously reported: 0.0% quarter-on-quarter seasonally-adjusted). Q3’s improvement came on the back of stronger domestic demand (Q3: +0.3% qoq SA; Q2: +0.1% qoq SA), especially fixed investment. On the downside, the external sector contributed negatively to growth.
Fixed investment grew 0.8% in Q3, accelerating from the flat result registered in Q2 and marking the best print in three quarters. Government consumption swung from a 0.3% drop in Q2 to a 0.2% expansion, also recording the highest reading in three quarters. Private consumption grew 0.2% in Q3, mirroring Q2’s reading. In addition, GDP growth received a positive contribution from higher inventories.
The external side of the economy performed poorly. Exports decelerated from a 2.1% expansion in Q2 to 0.1% in Q3, while import growth also decelerated, but less than exports, expanding 0.7% in Q3 from Q2’s 1.3%. As exports increased less than imports, the external sector’s net contribution to overall growth swung from plus 0.3 percentage points in Q2 to minus 0.1 percentage points in Q3.
In annual terms, the economy grew 1.0% in Q3, which was slightly above Q2’s 0.8% rise and marginally higher than the 0.9% increase reported in the preliminary estimate. Italy’s economic outlook looks quite uncertain, as the unsolved weakness of the banking sector and the urgent need for both a public sector downsizing and incisive market-liberalizing reforms add to the political instability which could result from the upcoming constitutional referendum on 4 December.