Italy: GDP moderates drop in Q1 amid positive shift in inventories
March 11, 2013
In the first quarter, GDP fell a seasonally and working-day adjusted 0.6% over the previous quarter, which was down from the 0.5% increase reported in the preliminary estimate released by the National Statistics Office (ISTAT) on 15 May. The reading marked an improvement from the 0.9% drop recorded in the previous quarter but marks, nonetheless, the seventh consecutive quarterly contraction in economic activity. On an annual basis, the economy shrank 2.4%, which was up from the 2.8% drop recorded in the previous quarter.
The improvement over the previous quarter was largely driven by a favourable shift in inventories, which added 0.3 percentage points to overall growth. In contrast, domestic demand excluding inventories deteriorated amid a 3.3% drop in fixed investment (Q4 2012: -1.8% quarter-on-quarter) and a 0.5% contraction in private consumption (Q4: -0.5% qoq).
Meanwhile, exports of goods and services fell 1.9% in Q1, which contrasted the 0.1% rise recorded in the previous quarter, while imports fell 1.6%, which was down from the 1.1% drop seen in Q4. As a result, the external sector's net contribution to overall growth fell from plus 0.3 percentage points in Q4 to minus 0.1 percentage points in Q1.
The Bank of Italy expects a 1.0% contraction in GDP this year and a 0.7% rise in 2014. Panellists expect the economy to contract 1.1% in 2013, which is down 0.1 percentage points from last month's forecast, and to expand 0.5% in 2014.
Author: Armando Ciccarelli, Head of Data Solutions