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“Poor December industrial production data adds to the risk of another GDP contraction in 1Q19, and pushes our average GDP growth forecast for 2019 down to a miserable 0.1%,” note ING analysts.

Key quotes

“Industrial production data for December 2018, released earlier today by Istat, came in well below consensus, confirming that the soft patch of Italian manufacturing activity continued without any relief until the end of 2018.”

“The poor December production release brings the 4Q18 performance down to a disappointing 1.1% QoQ contraction, which leaves a negative statistical carryover to 2019. Based on soft indicator evidence for January, chances of an exit from recession already in 1Q19 look slim.”

“Our new base case profile pencils in another GDP contraction for 1Q19 and foresees a very gradual recovery thereafter; this would translate into a miserable average growth rate of 0.1% in 2019, with downside risks.”