Paolo Pizzoli, Senior Economist at ING, notes that Italy’s seasonally adjusted 3Q18 GDP was flat quarter on quarter while expanding by 0.8% in annual terms.
Key Quotes
“Istat indicated that domestic demand (gross of inventories) and net exports were both growth neutral. On the back of a deteriorating international demand backdrop, we expected net exports to subtract from quarterly growth, but softer domestic demand kept a lid on imports as well.”
“On the domestic demand front, we suspect soft industrial production translated into slower inventory accumulation, with private consumption and gross fixed capital formation just about able to compensate.”
“On the one hand, consumer confidence edged up to 116.6 (from 116.1 in September), confirming close to recent highs; the improvement built on the expectation component, while the current component softened.”
“More worryingly, the composite business confidence fell for the third time in a row, reaching 103.6 – the lowest level since September 2016.”
“With external headwinds likely to continue to weigh on net exports, the onus of growth looks set to remain on domestic demand.”
“Tentatively anticipating a 0.1% QoQ GDP expansion for 4Q18, we revise our forecast for average 2018 GDP growth downwards to 1% (from 1.1% previously).”
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