Italy Economy Contracts For 1st Time Since 2014

The Italian economy unexpectedly shrank 0.1 percent quarter-on-quarter in the third quarter of 2018, folllowing a 0.2 percent growth in the previous period, the final estimated showed. It was the first contraction since the second quarter of 2014.
Istat | Stefanie Moya | 11/30/2018 11:46:20 AM
From the expenditure side, gross fixed investment declined 1.1 percent in the third quarter of the year, after increasing 2.8 percent in the precedent period, mainly due to spending on machinery and equipment and weapon systems (-2.8 percent from to 6.9 percent); tranport equipment (-0.7 percent from to 7.6 percent); other buildings and structures (0.3 percent from 0.8 percent) and dwellings (0.6 percent from 0.7 percent). Additionally, household consumption fell by 0.1 percent, compared to a flat reading in the second quarter, and government expenditure showed no growth, following a 0.2 percent gain. 

Net trade contributed positively to the GDP as exports rose 1.1 percent (from 0.6 percent in Q2) while imports went up at a softer 0.8 percent (from 2.4 percent).

From the production side, the services industries shrank by 0.2 percent, following a 0.3 percent growth in the prior period. Five out of the seven sub-sectors of the services induestries recorded contraction: financial and insurance activities (-1.5 percent from 2.1 percent in Q2); professional and support activities (-1.3 percent from -0.1 percent); other services (-0.3 percent from 0.4 percent); and information and communication (-0.3 percent from -1.1 percent). Additionally, trade, transport and accommodation recorded no growth, after expanding 0.3 percent in the second quarter. On the other hand, public administration, defense, education, health rose 0.1 percent (from a flat reading) and real estate activities advanced 0.4 percent (the same pace as in Q2).

Industrial output contracted by 0.1 percent from a 0.2 percent growth in the previous period, as manufacturing fell 0.3 percent (from 0.1 percent in Q2) and construction rose 0.6 percent (the same as in Q2).

By contrast, agriculture output grew 1.6 percent, rebounding from a 2.8 percent contraction in the second quarter. 

Year-on-year, the economy advanced 0.7 percent, after a 1.2 percent expansion in the second quarter of the year and missing market consensus of a 0.8 percent growth. It was the weakest growth rate since the first quarter of 2015.

Italy Economy Contracts For 1st Time Since 2014