Italy: Two-year recession ends in Q3
December 10, 2013
In the third quarter, GDP was unchanged on a seasonally and working-day adjusted basis over the previous quarter, which was slightly above the 0.1% decrease reported in the preliminary estimate released by the National Statistics Office (ISTAT) on 14 November. The result marked an improvement over the 0.3% drop seen in the second quarter. The flat reading ends a streak of eight consecutive contractions in GDP - the longest recession in the country's history. On an annual basis, the economy contracted 1.8%, which was up from the 2.2% fall recorded in Q2.
The quarterly improvement reflects better performance in the domestic sector and a positive shift in inventories; meanwhile, the external sector fared worse than in the previous quarter. Private consumption dropped 0.2% in Q3, up from the 0.5% drop in Q2. Fixed investment, however, deteriorated from a flat reading in Q2, to a 0.6% contraction in Q3.
On the external side, exports of goods and services expanded 0.7% in Q3, which was in line with the 0.7% rise recorded in the previous quarter. Simultaneously, imports rose 2.0% in Q3, which contrasted the 0.7% drop seen in the second quarter. As a result, the external sector's net contribution to overall growth swung from plus 0.4 percentage points in Q2 to minus 0.4 percentage points in Q3.
The Bank of Italy expects a 1.0% contraction in GDP this year and a 0.7% rise in 2014. Panelists expect the economy to contract 1.1% in 2013, which is down 0.1 percentage points from last month's forecast. The panel expects GDP to expand 0.5% in 2014.
Author: Armando Ciccarelli, Head of Data Solutions