Italy: Growth accelerates in Q4
GDP expanded 0.2% in seasonally adjusted quarter-on-quarter terms in Q4 from the previous quarter, following Q3’s 0.1% uptick and beating market expectations. Compared with Q4 2022, GDP increased 0.5% on a seasonally adjusted annual basis in Q4, following the 0.1% rise recorded in the previous quarter.
Looking at the breakdown of the quarter-on-quarter growth figure by expenditure, the statistical office said that domestic demand including inventories detracted from the final reading, while external demand made a positive contribution. Sector-wise, the primary sector contracted, while the secondary and tertiary sectors expanded.
A more detailed breakdown will be made available on 1 March.
This year, GDP should expand at an underwhelming pace. Industrial production should rebound, underpinned by stronger foreign demand, and EU funds disbursement should support activity. However, waning savings and still-high interest rates will restrain growth. A heavy public debt and rising debt-servicing costs, coupled with a possible reignition of financial turbulence, pose downside risks to the outlook. Pro-market policies from the center-right government pose upside risks.
Commenting on the outlook, Loredana Maria Federico, Chief Italian Economist at Unicredit, stated:
“We expect real GDP to show moderate quarterly growth this year. We see scope for an increase in private consumption amid lower inflation and good conditions in Italy’s labor market. Fixed investment might show resilience as a result of a gradual recovery in global trade and support for public investment from the implementation of Italy’s Recovery and Resilience Plan.”