Italy’s economy stagnates in Q3, but inflation slows sharply -October 31, 2023 at 11:28 am EDT
* Q3 GDP flat q/q vs forecast of 0.1%
* Weak domestic demand drags down growth
* Italy narrowly avoids recession after Q2 contraction
* Inflation slows in October to 1.9%, lowest since 2021
ROME, Oct 31 (Reuters) – Italy’s economy stagnated in
the third quarter from the previous three months, preliminary
data showed on Tuesday, a weaker reading than expected following
a 0.4% contraction in the second quarter.
On a year-on-year basis, gross domestic product in the euro
zone’s third largest economy was also flat, national statistics
bureau ISTAT reported.
A Reuters survey of 24 analysts had forecast a 0.1%
quarterly increase and an identical 0.1% rise compared with the
year earlier.
The flash data showed that in the April to September period
Italy avoided by a whisker a so-called technical recession,
defined by economists as two consecutive quarters of falling
GDP.
Looking ahead, the outlook remains clouded by European
Central Bank interest hikes aimed at curbing inflation and
geopolitical tensions linked to the conflicts in Ukraine and
most recently in the Middle East.
Giorgia Meloni’s government is also having difficulty
meeting policy conditions set by the European Commission for the
transfer of billions of euros of COVID-19 pandemic recovery
funds, and is behind schedule in investing the sums it has
already received.
More positively, Italian inflation slowed sharply in
October, ISTAT said in a separate report.
The country’s EU-harmonised consumer price index (HICP)
rose 1.9% year-on-year following a 5.6% rate in September to
post its lowest reading since July 2021.
Core inflation, excluding the volatile fresh food and
energy sectors, was running far higher at 4.5% in October but
still eased compared with 4.9% the month before.
The Treasury last month trimmed its forecast for full-year
2023 GDP growth to 0.8% from 1.0% and cut next year’s forecast
to 1.2% from 1.5%.
ISTAT said the flat GDP reading in the third quarter
compared with the previous three months was the result of
shrinking domestic demand, offset by positive net exports.
It gave no numerical breakdown of components with its
preliminary estimate, but said industry had expanded, services
had stagnated and agriculture declined.
The statistics bureau made no revisions to the second
quarter, when GDP shrank 0.4% quarter-on-quarter and was up 0.3%
year-on-year.
So-called “acquired growth” at the end of the third quarter
stood at 0.7%, meaning that if there is no quarterly growth
between October and December, over the whole year GDP will be up
0.7% compared with 2022.
