Italian Economic Recession Confirmed in Q4
Italy's economy shrank 0.1 percent on quarter in the last three months of 2018, the same as in the previous period and slightly above the 0.2 percent contraction previously estimated. Still, it was the second straight quarter of GDP decline, throwing the country into recession for the third time in a decade.
3/5/2019 10:00:47 AM
From the expenditure side, the largest contribution to the GDP contraction came from inventory changes, which subtracted 0.4 percentage points to growth. By contrast, positive contribtions came from net exports (0.2 percentage points), consumer spending (0.1 percentage points) and fixed investment (0.1 percentage points) while government spending was neutral.
Exports increased 1.3 percent in the fourth quarter (vs 1 percent in Q3) and imports rose at a slower 0.7 percent (vs 0.4 percent in Q3). In addition, household consumption advanced 0.1 percent, after being unchanged in the previous period; and fixed investment grew 0.3 percent, following a 1.3 percent fall in Q3, driven by spending on transport equipment (1.2 percent vs -2.7 percent) and plants, machinery and armaments (0.9 percent vs -3.7 percent) and residential construction (0.1 percent vs 0.7 percent). On the other hand, government expenditure declined 0.1 percent, the same pace as in the third quarter.
From the production side, services activity increased 0.1 percent in the fourth quarter, reversing a 0.2 percent drop in the previous period. Growth was recorded within three of the seven sub-sectors of the services industries: professional and support activities (0.5 percent vs -1.2 percent); trade, transport and accommodation (0.2 percent vs unchanged); and real estate activities (0.2 percent vs 0.3 percent). Meanwhile, output was unchanged for financial and insurance activities (vs -0.1 percent in Q3); public administration, defense, education, health (vs 0.1 percent in Q3); and other service activities (vs 0.1 percent in Q3); while a contraction was seen in information and communication services (-1.5 percent, the same as in Q3). Industrial output decreased 0.5 percent (vs -0.2 percent in Q3), as manufacturing shrank 0.5 percent (vs -0.3 percent in Q3) and construction output contracted 0.4 percent (vs 0.6 percent in Q3). Agriculture output fell 1.1 percent, following a 0.7 percent decline in the third quarter.
Year-on-year, the economy stalled in the fourth quarter, compared to a preliminary 0.1 percent growth and below the third-quarter expansion of 0.6 percent. It was the weakest economic performance since the third quarter of 2014.