Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Italy GDP contracts in third-quarter for first time in four years, on weak domestic demand

Published 11/30/2018, 06:10 AM
Updated 11/30/2018, 06:15 AM
© Reuters. People are seen in a Conad grocery shop in Rome

© Reuters. People are seen in a Conad grocery shop in Rome

Nov 30 (Reuters) - Italy's economy contracted in the third quarter for the first time in four years due to falling domestic demand, statistics bureau ISTAT said on Friday, cutting a preliminary estimate of stagnant gross domestic product.

On a year-on-year basis, third quarter growth was revised down to show 0.7 percent growth compared with an estimate of 0.8 percent made a month ago.

The 0.1 percent drop in GDP was the first contraction since the second quarter of 2014, ISTAT said.

In the third quarter, the economy was held back by weak domestic demand, with consumer spending falling 0.1 percent from the previous quarter and investments declining by 1.1 percent.

Domestic demand, net of inventory changes, subtracted 0.3 percent from growth, while trade flows contributed positively by a marginal 0.1 percent.

The third quarter contraction continues a steady slowdown in Italian growth over the last 18 months.

Second quarter growth was unrevised at 0.2 percent on the quarter and 1.2 percent year-on-year.

Last month the government, which took office in June, cut the full-year 2018 GDP growth forecast to 1.2 percent from a 1.5 percent projection made in April by the previous administration.

After the third quarter data, achieving even the revised target would need an extremely strong acceleration at the end of the year.

ISTAT said so-called "acquired growth" at the end of the third quarter stood at 0.9 percent, meaning that if there is no quarterly growth in the final quarter, full year 2018 expansion come in at 0.9 percent over the previous year.

The new coalition of the anti-establishment 5-Star Movement and the right-wing League has presented a big-spending 2019 budget it says is needed to prevent Italy's chronically sluggish economy slipping into another recession.

However the budget, which targets the deficit to rise to 2.4 percent of GDP in 2019 from 1.8 percent this year, has been rejected by the European Commission, which wants deficit cuts from highly-indebted Italy, rather than fiscal expansion.

Negotiations between the government and the Commission are ongoing but the two sides still seem far apart.

ISTAT gave the following details on contributions to quarterly growth in the second and third quarters of this year.

© Reuters. People are seen in a Conad grocery shop in Rome

(Gavin Jones, Rome Newsroom + 39 06 85 22 4350, rome.newsroom@news.reuters.com)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.