European Markets

Italy Q3 GDP confirmed at 2.6% q/q on strong domestic demand, y/y rate revised up to 3.9%

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By Gavin Jones

Nov 30 (Reuters) - Italy's economy grew by 2.6% in the third quarter from the previous three months due mainly to strong consumer spending, national statistics bureau ISTAT said on Tuesday, confirming a preliminary estimate.

On a year-on-year basis, third quarter gross domestic product was revised up slightly to 3.9% percent from the 3.8% printout in ISTAT's flash estimate on Oct. 29.

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The breakdown of GDP components showed broad-based growth, with consumer spending contributing 1.7 percentage points to the overall quarterly increase and net exports contributing 0.5 points.

Looking ahead, Mario Draghi's government officially forecasts a GDP rebound of 6.0% this year, slowing to 4.7% in 2022.

Next year GDP should finally recoup the record contraction of 8.9% in 2020, when the economy was crippled by coronavirus lockdowns.

Recent data has been stronger than expected and Draghi and other ministers have said this year's growth is likely to come in above the official 6.0% target, set in late September.

However, the outlook has been clouded by an increase in COVID-19 cases and the emergence last week of the Omicron variant which scientists say vaccines may be less effective against.

The Bank of Italy said last week it expected growth to continue in the fourth quarter of this year but at a slower rate than in the previous two quarters.

In the third quarter, consumer spending rose 3.0% from the previous three months, government spending edged up 0.1% and investments were up 1.6% percent.

Imports grew 2.1%, while exports increased by 3.4%.

ISTAT gave the following details on contributions to quarterly growth for the second and third quarters of this year.

PERCENTAGE POINT CONTRIBUTIONS TO Q/Q GROWTH

Q3 Q2

Final domestic demand 2.0 3.1

-Final national consumpton 1.7 2.6

-Consumer spending 1.7 2.8

-Government spending 0.0 -0.2

-Gross Fixed Investment 0.3 0.5

Inventory Changes 0.1 -0.8

Net Exports 0.5 0.3

GDP 2.6 2.7

((Gavin Jones, Rome Newsroom, gavin.jones@reuters.com))

Keywords: ITALY ECONOMY/GDP

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