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Paolo Pizzoli, Senior Economist at ING, notes that the Italian 1Q18 GDP was confirmed at 0.3% QoQ (as in 4Q17) and 1.4% YoY (from 1.6% in 4Q17), propelled by domestic demand, with net exports acting as a drag.

Key Quotes

“Inventory accumulation was the main driver (0.7% QoQ contribution), followed by private consumption (0.3% QoQ contribution). Government expenditure was growth neutral. Developments in investments and exports are a reason for concern. Gross fixed capital formation subtracted 0.2% from quarterly growth, on the back of a disappointing contraction in the key machinery and plants component. The negative 0.4% quarterly contribution of net exports was the result of a contraction of exports which widely outpaced that of imports.”

“Available data evidence suggests that a similar pattern of growth should remain in place in 2Q18, with a slight downside risk.”

“Looking at average 2018 GDP growth, for the time being we tentatively confirm our 1.3% forecast, with downside risks.”