Italy’s Economic Growth Shows Signs of Slowdown

ROME (Reuters) – Italy’s economic growth slowed to 0.2% in the second quarter, down from 0.3% in the previous quarter, as per preliminary data released on Tuesday.

The annual increase in GDP for the euro zone’s third-largest economy stood at 0.9%, aligning with forecasts from a Reuters survey.

According to the national statistics bureau, ISTAT, domestic demand contributed positively to growth, while the net export component had a negative impact.

ISTAT did not provide a breakdown of these components in its preliminary report, but indicated that growth was supported by services, with negative influences from industry and agriculture.

Loredana Federico, chief Italian economist at UniCredit, suggested that the recent economic weakness might be reversible, predicting a gradual acceleration in GDP for the third quarter of 2024, primarily driven by increasing demand.

This marks the fourth consecutive quarterly increase, with an acquired variation growth rate of 0.7% at the close of the second quarter. This indicates that even if quarterly GDP growth remains flat for the rest of 2024, the annual growth could still reach 0.7%.

The Italian government forecasted a 1% expansion for this year, consistent with last year’s growth rate of 0.9%. Meanwhile, the think tank Prometeia maintained a stance of cautious optimism amid challenges facing the economy.

Additional data showed that GDP in the euro zone rose 0.3% quarter-on-quarter in the first quarter of the year. Moreover, year-on-year growth for Italy in Q1 was slightly adjusted down to 0.6% from 0.7%.

Final Q2 GDP results from ISTAT are expected to be published on September 2.