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Italy GDP Q1 2022

Italy: GDP contracts in Q1

According to a preliminary reading, GDP contracted 0.2% in the first quarter in seasonally adjusted quarter-on-quarter terms, contrasting the 0.7% expansion logged in the fourth quarter of last year. Q1’s reading marked the worst reading since Q4 2020. On an annual basis, economic growth waned to 5.8% in Q1, compared to the previous period’s 6.2% expansion.

Looking at the breakdown of the quarter-on-quarter growth figure by expenditure, the statistical office said that domestic demand contributed positively to the final reading, while net exports contributed negatively. Looking at the breakdown by industry, the statistical office said that the agricultural sector improved, the industrial sector was stable and the services sector deteriorated. Weak services sector activity was likely related to the surge of Covid-19 cases in the quarter.

A more detailed breakdown will be made available on 31 May.

ING’s Paolo Pizzoli commented on the reading:

“We suspect the positive demand contribution to GDP has come from a combination of inventory accumulation and investment (fuelled by incentive-propelled construction), with private consumption possibly acting as a drag. Households’ real disposable income has undergone increasing pressure over the quarter, and this has clearly been reflected in falling consumer confidence data. On the supply side, this was mirrored in the fall in services value-added.”

UniCredit’s Loredana Maria Federico also commented on the reading:

“When more details are made available at the end of May, we expect to see a quarterly contraction in private consumption and a slowdown in fixed investment, as Covid-19 restrictions limited spending on services and high energy costs started to dent household purchasing power and firms’ profits.”

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