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UPDATE 1-Italian economy shrinks 2.0% in Q4 2020, posts full-year GDP drop of 8.8%

    * Q4 2020 GDP -2.0% q/q, -6.6% y/y
    * Domestic demand and trade both negative for GDP
    * Prelim full-year 2020 GDP -8.8% vs govt target of -9%

 (Adds table)
    By Gavin Jones
    ROME, Feb 2 (Reuters) - Italy's economy shrank by 2.0% in
the fourth quarter of last year from the previous three months,
preliminary data showed on Tuesday, a slightly smaller slump
than expected after a rebound in the third quarter.
    On a year-on-year basis, fourth quarter gross domestic
product in the euro zone's third largest economy was down 6.6%,
national statistics bureau ISTAT said.
    A Reuters survey of 24 analysts had forecast a 2.2%
quarterly fall, down 6.7% from the year earlier.
    The Italian economy plunged in the first half of last year
due to government lockdowns to try to rein in the coronavirus.
    It rebounded by 16% in the third quarter when restrictions
were relaxed, before shrinking again at the end of the year as
the epidemic gathered strength, forcing new curbs on businesses
and freedom of movement.
    ISTAT marginally revised its third quarter data to show a
16.0% quarter-on-quarter rise and a 5.1% year-on-year fall,
previously reported as 15.9% and -5.0%.
    Over the whole year, GDP shrank by 8.8%, according to
ISTAT's preliminary estimate, not adjusted by the number of days
worked.
    That was the steepest annual GDP drop for Italy since World
War II but it was a slightly smaller contraction that the -9%
forecast by the Italian government.
     The institute will issue definitive full-year data on March
1.
    Looking ahead, Rome officially forecasts a rebound of 6%
this year, although Economy Minister Roberto Gualtieri has
warned this will probably have to be revised down as COVID-19
continues to blight economic prospects.
    ISTAT in December forecast 2021 growth of 4%.
    The outlook for the first quarter is highly uncertain and
dependent on infection rates and government-imposed
restrictions.
    ISTAT said that in the fourth quarter domestics demand and
trade flows both contributed negatively to GDP.  
    It gave no numerical breakdown of components with its
preliminary estimate, but said industry, services and
agriculture had all declined..
    Italy, the first Western country to be hit by the COVID-19
pandemic, has recorded almost 89,000 fatalities since its
outbreak emerged almost a year ago, the second highest death
toll in Europe and the sixth highest in the world.
    
    ISTAT gave the following details on Italian GDP in the last
three quarters of 2020:  
                                    Q4        Q3         Q2 
 Q/Q (pct change)                  -2.0       16.0r      -13.0 
 Y/Y (pct change)                  -6.6       -5.1r      -18.1r
     r=revised

 (Reporting By Gavin Jones)
  
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