Italy: Growth remains weak in Q1
June 10, 2011
According to more complete data released on 10 June, GDP rose a seasonally and working day adjusted 0.1% quarter-on-quarter in Q1, confirming the preliminary estimate released on 13 May. The expansion was in line with the 0.1% expansion in Q4 2010. On an annual basis, the economy expanded 1.0%, below the 1.5% rise recorded in the previous quarter and marking the lowest reading in the last four quarters. The softer result was mainly due to a weaker domestic sector. Domestic demand experienced a strong moderation and swung into negative territory, mainly due to an unfavorable shift in inventories. That said, private consumption rose 0.2%, only a tad below the 0.3% rise recorded in Q4, while fixed investment expanded 0.1%, contrasting the 0.8% drop recorded in the previous three-month period. Meanwhile, the net contribution from the external sector to overall growth improved in Q1, as exports expanded while imports moderated. Exports of goods and services were up 1.4% from the 0.4% rise recorded in the previous quarter, while imports grew 0.7%, down from 2.8% in Q4. As a result, the net contribution from the external sector to overall growth swung from minus 0.7 percentage points in Q4 to plus 0.2 percentage points in Q1. The Ministry of Finance sees the economy expanding 1.1% this year. Next year, the government expects GDP to grow 1.3%, down from a previously forecasted 2.0%. The Bank of Italy (BoI) is slightly more pessimistic than the government and sees the economy expanding only 0.9% this year and 1.1% in the next.
Author: Armando Ciccarelli, Head of Data Solutions