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Italy: Economy enters technical recession in Q2

August 29, 2014

In the second quarter, GDP contracted a seasonally- and working-day adjusted 0.2% over the previous quarter, according to more detailed data released by the National Statistics Office (ISTAT) on 29 August. The contraction followed the 0.1% decrease observed in the first quarter. The figure met the preliminary estimate, thus confirming that the economy entered a technical recession. Q2’s contraction was mainly driven by a deterioration of the external sector.

Government spending swung from a 0.4% increase in Q1 to a 0.1% decrease in Q2. On the other hand, growth in private consumption was stable at Q1’s 0.1%. Fixed investment fell 0.9% over the previous quarter in Q2 (Q1: -1.0% quarter-on-quarter).

On the external side of the economy, exports rose 0.1% in the second quarter, which matched the result observed in the previous quarter. Conversely, imports swung from a 0.1% contraction in Q1 to a 1.0% expansion in Q2. As a result, the external sector’s net contribution to overall growth swung from plus 0.1 percentage points in Q1 to minus 0.2 percentage points in Q2.

In annual terms, the economy contracted 0.2% in Q2, which met the preliminary estimate. The figure marked the softest contraction since Q3 2011 and was an improvement over the 0.4% drop seen in the previous quarter.

The Bank of Italy projects a 0.7% expansion in GDP in 2014 and a 1.0% expansion in 2015. Panelists see the economy growing 0.2% in 2014, which is down 0.2 percentage points from last month’s forecast. For 2015, panelists expect the economy to expand 1.1%.


Author:, Senior Economist

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Italy GDP Q2 2014 0

Note: Quarter-on-quarter changes of seasonally-adjusted GDP and year-on-year variation in %.
Source: National Statistics Institute and FocusEconomics Consensus Forecast.


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