Italy: GDP at +0.9% for 2016 beats government’s forecasts by one decimal point |

Italy: GDP at +0.9% for 2016 beats government’s forecasts by one decimal point

by Davide Colombo

Istat’s estimates yesterday showed an 8th consecutive quarter of growth. The trend, which began in the first quarter of 2015, has been weak but c onsistently positive. If the rough figures (which are provisional and aggregated) are confirmed to be true in March, +0.9% would represent the highest increase in six years (+1.7%).

The figures confirm that Italy has survived a double dip recession since 2008: in fact, 2015 ended with the GDP (measured by volume) at +0.7%, 2014 at +0.1%, and 2013 and 2012 in the negative (-1.7% and -2.8%, respectively). The GDP was at +0.6% in 2011, and +1.7% in 2010.

The projected variation for the current year (which, in turn, will have two fewer working days in comparison to 2016) is 0.3%. Keep in mind that, according to estimates, a working day is the equivalent of around 0.08% of the GDP’s variation, with two days representing 0.12%.

With the assumption that growth in the last quarter was similar to Istat’s estimates, the Parliamentary Budget Office (UpB) said in its end-of-January situational statement that, in order to reach the goal of 1% growth in 2017 (the government’s prediction), the GDP would need to speed up to a pace of 0.4% in the second quarter.

For the current year, a 0.9% net growth in the GDP has been predicted by the Bank of Italy, (in their 1st Economic Bulletin in January, which corrects for the number of working days), the European Commission (Winter 2017), and the Organisation for Economic Co-operation and Development (OECD). However, a more limited growth of 0.7% was predicted by the IMF and the Consensus.

In order to fully grasp the components of 2016’s last quarter’s growth, we’ll have to wait for Istat’s national figures, which will be released on March 1st. Many things will be learned between then and March 3rd, when the new yearly figures that account for this last quarter will be released: for example, how much damage was done to domestic demand by the “changing of the guard” that seems to be underway between consumer spending and investment spending.

In the ‘flash’ statistics published yesterday just before Eurostat’s ‘flash’ statement was released, the extent of what they pointed out was that the new, positive trend is “the product of an increase in added value in the industrial and service sectors, and a decrease in added value in agriculture.”

Whereas the demand side is “a positive contribution towards the national component (before provisions), and a negative contribution towards the net foreign component.”

Though there was a slight drop in comparison with the summer numbers (at +0.3%), the Italian economy showed a postitive change in its GDP (+0.2%) over the last quarter of 2016. The rough estimate is around +0.9% overall, one decimal point higher than been predicted in the draft budget plan last October (+0.8%).


by Davide Colombo | Sole24Ore

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