GDP in Italy
Italy - GDP (billions of Euros)
Economy shrinks in final quarter of 2019, wrong-footing markets
In the fourth quarter of the year, Italy’s GDP contracted 0.3% over the previous period in seasonally- and working-day adjusted terms, according to an advance estimate released by Italy’s Statistics Institute (ISTAT) on 31 January. The result, which marked the first quarterly contraction following one year of substantial stagnation, as well as the sharpest drop in close to seven years, surprised on the downside; analysts had expected the economy would grow 0.1%. According to the accompanying press release, Q4’s reading reflected lower production in the industrial and agricultural sectors, while output in the services sector was virtually flat. Meanwhile, in annual terms, the economy flatlined in Q4, down from the third quarter’s 0.5% expansion. The fourth quarter’s result brings full-year growth for 2019 to 0.2%, down from the 0.7% expansion clocked in 2018 and marking the softest reading since 2014.
On the demand side, preliminary data indicated that domestic demand weighed on growth in the quarter, outweighing the positive contribution from the external sector—which nonetheless looks set to have been modest due to the challenging external backdrop. Moreover, policy and political uncertainty and gloomy demand prospects hit business investment, which is further corroborated by anemic credit growth throughout the quarter. Household spending, meanwhile, likely weakened from the previous quarter, as suggested by muted wage growth, labor market slack and a rising savings ratio in the face of political and economic uncertainty. More detailed national accounts data will be released on 4 March.
Commenting on the outlook, Loredana Federico, chief Italian economist at UniCredit, stated:
“Concern remains with regard to the prolonged weakness of the industrial sector (three quarters in recession) and its negative impact – mainly via a deterioration in labor market indicators – on domestic demand and, thus, services and retail activity. However, the degree to which this negative spillover will play a role is still uncertain.”
Growth should pick up some modest steam this year, thanks to somewhat stronger domestic demand and as the industrial sector struggles out of recession. Nevertheless, Italy will continue to lag behind its EU peers, weighed down by lackluster investment and muted productivity growth. Long-standing problems cloud Italy’s outlook, and much-needed pro-market reforms and political stability will most likely remain elusive under the current governing coalition, which comprises of a fragile alliance between the center-left Democratic Party and anti-establishment Five Star Movement. Of particular concern, the country’s burdensome public debt load, coupled with undisciplined government spending and political instability, could trigger renewed financial turbulence.
FocusEconomics panelists project growth of 0.4% in 2020, which is unchanged from last month’s forecast, and 0.6% in 2021.
Italy - GDP (EUR bn) Data
|GDP (EUR bn)||1,623||1,651||1,691||1,729||1,757|
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|
Get a sample report showing our regional, country and commodities data and analysis.
Request a Trial
Start working with the reports used by the world’s major financial institutions, multinational enterprises & government agencies now. Click on the button below to get started.
February 10, 2020
Industrial output dived 2.7% in December on a month-on-month, seasonally-adjusted basis, following November’s flat reading and logging the sharpest contraction in almost two years.
February 4, 2020
Consumer prices rose 0.2% month-on-month in January, matching December’s increase, according to preliminary data released by the National Statistical Institute (ISTAT) on 4 February.
February 3, 2020
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) jumped to an eight-month high of 48.9 in January from December’s over six-year low of 46.2.
January 31, 2020
In the fourth quarter of the year, Italy’s GDP contracted 0.3% over the previous period in seasonally- and working-day adjusted terms, according to an advance estimate released by Italy’s Statistics Institute (ISTAT) on 31 January.
January 29, 2020
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—fell to 99.2 in the first month of the year from December’s 100.7. January’s result came on the back of a notable deterioration in sentiment in both the market services and retail trade sector more than offsetting more limited improvements in sentiment in the manufacturing and constructions sectors.