Italy: Economy ended its short lived recession in 1Q19 - ING

Paolo Pizzoli, senior economist at ING, points out that the Italian economy ended its short lived recession in 1Q19 as revised data shows that GDP increased 0.1% quarter-on-quarter (revised from 0.2%) and contracted 0.1% year-on-year (revised from +0.1%).

Key Quotes

“On the back of the new release, the statistical carryover for the whole of 2019 is flat growth.”

“The relevance of today’s release lies with the disclosure of the detailed demand breakdown. The main driver of the quarterly expansion was net exports (0.5% contribution), reflecting a marked contraction of imports and marginally increasing exports.”

“On the domestic demand front, private consumption and gross fixed capital formation (thanks to construction) both added 0.1% to quarterly growth, while inventories subtracted a hefty 0.6%. From the supply side, value added increased in agriculture and manufacturing and contracted in services.”

“Looking ahead, still lacking hard data for 2Q19, we can only rely on available confidence data for direction. After a weak reading for both consumer and business confidence in April, both indices posted an unexpected rebound in May. Digging into the detail, judgements about the level of inventories declined just slightly.”

“Another marginal GDP quarterly expansion seems possible. For the time being, we prefer to stick to our current forecast of 0.2% average GDP growth in 2019.”