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Italy: Economy enters technical recession in Q3

December 1, 2014

In the third quarter, GDP contracted a seasonally- and working-day adjusted 0.1% over the previous quarter, according to more detailed data released by the National Statistics Office (ISTAT) on 1 December. The contraction matched the preliminary estimate and came in slightly above the 0.2% decrease observed in the second quarter, thus confirming that the economy entered a technical recession. Q3’s contraction was mainly driven by a deterioration of domestic demand.

Growth in private consumption inched down from 0.2% in Q2 to 0.1% in Q3, while government consumption deteriorated from a 0.1% expansion in the second quarter to a 0.3% contraction in the third quarter. In addition, fixed investment fell 1.0%, which was a deterioration over the 0.8% decrease observed in the previous quarter.

On the external side of the economy, growth in exports decelerated from 1.3% in Q2 to 0.2% in Q3, while imports swung from a 0.9% expansion in the second quarter to a 0.3% contraction in the third quarter. As a result, the external sector’s net contribution to overall growth was stable at the previous month’s 0.1 percentage points.

In annual terms, the economy contracted 0.5% in Q3, which was greater than the 0.4% contraction reported in the preliminary estimate and Q2’s 0.4% decrease. The figure marked the steepest decrease in three quarters.

Panelists see the economy contracting 0.3% in 2014, which is down 0.1 percentage points from last month’s forecast. For 2015, panelists expect the economy to expand 0.5%, which is also down 0.1 percentage points from last month’s estimate.


Author:, Senior Economist

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Italy GDP Chart


Italy GDP Q3 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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