Consumption in Italy
Italy - Consumption
Second estimate reveals both domestic and external demand supported Q3’s rebound
A second estimate revealed that GDP soared 15.9% in Q3 over the previous period in seasonally- and working-day-adjusted terms, amid easing lockdown measures. Although the result came in slightly below the preliminary estimate of a 16.1% jump, it strongly contrasted Q2’s record 13.0% contraction and still marked the strongest expansion since the current series began in 1995. In year-on-year terms, the economy shrank a revised 5.0% in Q3 (previously reported: -4.7% yoy), softening from the second quarter’s 18.0% contraction.
Rebounding domestic and external demand drove the bounce-back in the third quarter. Household spending jumped 12.4% quarter-on-quarter, swinging from Q2’s 11.5% contraction, amid strengthening consumer confidence and job gains as lockdown measures were eased. Additionally, fixed investment jumped 31.3% in the quarter, contrasting Q2’s 17.0% drop, as businesses resumed activity and business sentiment improved. Government consumption, meanwhile, rose 0.7% in Q3, slightly higher than Q2’s 0.3% uptick.
All told, domestic demand—excluding stocks—added 13.0 percentage points to growth in Q3, while stock variation subtracted 1.0 percentage point from quarter-on-quarter growth as companies lightened stock in warehouses.
Meanwhile, the external sector added 4.0 percentage points to growth in Q3, after shaving off 2.3 percentage points in Q2, reflecting a sharp rebound in exports. Exports of goods and services skyrocketed 30.7% quarter-on-quarter (Q2: -23.9% qoq s.a.) as easing lockdown measures abroad fueled foreign demand, while imports of goods and services jumped 15.9% quarter-on-quarter after crashing 17.8% in Q2.
Looking ahead, Paolo Pizzoli, senior economist at ING, called for caution:
“Detailed third quarter GDP data confirms a strong rebound. However the impact of the second wave, and of the soft lockdowns put in place to contain it, will likely bring about a negative fourth quarter and a very soft start to 2021, before the positive impact of vaccine availability shows up in the numbers.”
GDP is set to expand in 2021, leading to a partial recovery of 2020’s losses. The gradual reopening of the global economy should support the external sector, while sustained EU funding and loose fiscal and monetary policies should fuel domestic demand. Rising Covid-19 cases and a high public debt pose downside risks, while the rollout of a vaccine could boost activity.
FocusEconomics panelists project activity to expand 5.1% in 2021, which is down 0.6 percentage points from last month’s forecast, and 3.0% in 2022.
Italy - Consumption Data
|Consumption (annual variation in %)||1.9||1.2||1.5||0.9||0.4|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||1.31||-0.40 %||Jan 01|
|Exchange Rate||1.12||0.65 %||Dec 31|
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January 13, 2021
Industrial output decreased 1.4% in November on a month-on-month, seasonally-adjusted basis.
January 7, 2021
Consumer prices increased 0.3% month-on-month in December, contrasting November’s 0.1% decrease.
January 4, 2021
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) rose to 52.8 in December from 51.5 in November.
January 4, 2021
The National Institute of Statistics (Istat)’s composite business confidence indicator (Clima di Fiducia delle Imprese Italiane, IESE)—which covers the manufacturing, construction, market services and retail sectors—rose from 83.3 in November to 87.7 in December. The increase was driven by an improvement in sentiment in the manufacturing and market services sectors more than offsetting falling sentiment in the construction and retail trade sectors.
January 4, 2021
The consumer confidence index rose to 102.4 in December from 98.4 in November. December’s strengthening was broad based.