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.
Author: Dirina Mançellari, Senior Economist