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By Gavin Jones and Antonella Cinelli
ROME (Reuters) – Italy’s economy stagnated in the third quarter of the past three months, initial data showed on Tuesday, a weaker-than-expected figure after a 0. 4% contraction in the second quarter.
In year-on-year terms, the gross domestic product of the eurozone’s third-largest economy also remained stable, national statistic ISTAT reported.
A Reuters poll of 24 analysts had forecast a quarterly increase of 0. 1% and a year-on-year increase of 0. 1%.
Flash data showed that between April and September, Italy narrowly avoided the so-called technical recession, explained by economists as two consecutive quarters of falling GDP.
Looking ahead, the outlook remains clouded by interest rate hikes through the European Central Bank aimed at reducing inflation and geopolitical tensions similar to the conflicts in Ukraine and, more recently, in the Middle East.
Giorgia Meloni’s government is also struggling to cope with the political situations set by the European Commission for the movement of billions of euros in COVID-19 recovery funds, and is lagging behind in investing the sums already received.
On a further note, Italian inflation slowed sharply in October, ISTAT said in a separate report.
The country’s Harmonised Index of Consumer Prices (HICP) rose 1. 9% year-on-year, after 5. 6% in September, to its lowest point since July 2021.
Core inflation, the new and volatile food and energy sectors, was much higher at 4. 5% in October but still slowed from 4. 9% last month.
Last month, the Treasury lowered its full-year 2023 GDP expansion forecast from 1. 0% to 0. 8% and downgraded its forecast for next year from 1. 5% to 1. 2%.
ISTAT said the stagnation in GDP in the third quarter compared to the past three months is the result of a contraction in domestic demand, offset by positive net exports.
The initial estimate does not provide a numerical breakdown of the components, but indicates that the industry has grown, stagnated, and agriculture has declined.
The statistics were unrevised in the second quarter, when GDP fell by 0. 4% quarter-on-quarter and increased by 0. 3% year-on-year.
The “expansion gained” at the end of the third quarter stood at 0. 7%, which means that if there is no quarterly expansion between October and December, over the total year, GDP will grow by 0. 7% until 2022.