Italy: Recession deepens in Q4
March 11, 2013
In the fourth quarter, GDP fell a seasonally and working-day adjusted 0.9% over the previous quarter, which confirmed the result of the preliminary estimate released by the National Statistics Office (ISTAT). The reading was down from the 0.2% drop recorded in the previous quarter and marks the sixth consecutive quarterly contraction in economic activity. Moreover, the reading represents the largest quarterly fall since the first quarter of 2009. On an annual basis, the economy shrank 2.8%, which was down from the 2.6% drop recorded in the previous quarter. In the full year 2012, the economy contracted 2.4%, contrasting the 0.4% rise recorded in 2011.
The quarterly contraction was driven by a deterioration in the external sector and a negative shift in inventories. In contrast, domestic demand excluding inventories improved, as private consumption stepped up from a 1.2% drop in Q3 to a 0.7% fall in Q4 and fixed investment mirrored the 1.2% contraction recorded in the previous three-month period.
Meanwhile, exports of goods and services rose 0.3% in Q4, which was below the 1.2% increase recorded in the previous quarter, while imports fell 0.9%, which was up from the 1.7% drop seen in Q3. As a result, the external sector's net contribution to overall growth fell from 0.8 percentage points in Q3 to 0.4 percentage points in Q4.
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