Italy: Growth moderates in fourth quarter
March 16, 2011
According to more complete data released on 11 March, in the fourth quarter GDP rose a seasonally and working day adjusted 0.1% quarter-on-quarter, confirming the preliminary estimate released on 15 February. The expansion was below the 0.3% rise observed in the third quarter. On an annual basis, the economy expanded 1.5%, a notch above the 1.4% rise recorded in the previous quarter. The weaker quarterly result was mainly due to a deterioration in the contribution of the external sector to growth. Domestic demand maintained the same pace as in the previous quarter, mainly supported by a positive shift in inventories. Private consumption rose 0.3%, a tad below the 0.4% rise recorded in the third quarter, while fixed investment contracted 0.7% quarter-on-quarter, contrasting the 0.8% expansion recorded in the previous three-month period. Meanwhile, the net contribution from the external sector to overall growth deteriorated in the fourth quarter, as imports outpaced exports for a second consecutive quarter. Exports of goods and services expanded a meagre 0.5%, down from the 2.6% rise recorded in the previous quarter, while imports grew 3.4%, down from the 4.9% expansion recorded in the June-September period. As a result, the net contribution from the external sector to overall growth dropped from minus 0.7 percentage points in the third quarter to minus 0.9 percentage points in the fourth. Based on quarterly figures, the economy expanded 1.2% in the full year 2010, which contrasted the revised 5.2% contraction recorded in 2009 (previously reported: -5.1%). The result marked the first year of positive growth after two consecutive years of contracting economic activity and matched the government's forecast for the year. The Ministry of Economy and Finance sees the economy growing 1.3% this year and 2.0% in 2011, while Prime Minister Silvio Berlusconi stated that the economy is likely to grow 1.5% in 2011. The Bank of Italy (BoI), in contrast, is far less optimistic and sees the economy expanding only 0.9% this year and 1.1% next year.
Author: Armando Ciccarelli, Head of Data Solutions