Financial Insights That Matter
Posted By Global Banking and Finance Review
Posted on January 30, 2025
By Gavin Jones
ROME (Reuters) -The Italian economy stagnated in the fourth quarter of last year from the previous three months, preliminary data showed on Thursday, missing a forecast for marginal growth and casting a shadow over prospects for this year.
The flat gross domestic product reading marked the second straight quarter of zero growth in the euro zone’s third largest economy.
Activity has petered out despite the arrival in Rome’s coffers of regular instalments of billions of euros of post-COVID 19 recovery funds from the European Commission.
On a year-on-year basis, Italy’s fourth quarter GDP was up 0.5%, national statistics bureau ISTAT said.
A Reuters survey of 29 economists had forecast a 0.1% rise quarter-on-quarter and a 0.6% increase year-on-year.
Over the whole of 2024, the economy grew by 0.5% from the year earlier, when adjusted for the number of working days, ISTAT said.
The most recent official forecast by Giorgia Meloni’s government envisaged 2024 growth of 1%, but that projection was not adjusted for working days. ISTAT will release non-workday-adjusted growth data on March 3.
There were four more days worked last year than in 2023, so the March 3 data may show higher growth than the figure released on Thursday.
The stagnant second half of 2024 leaves an extremely weak platform going into this year, when the government is forecasting growth of 1.2%. Economists said that projection looked very hard to meet even before Thursday’s data.
Looking ahead, the outlook is clouded by geopolitical tensions, the prospect of U.S. trade tariffs and the difficulties faced by the Rome government in deploying its EU pandemic recovery funds.
The flat GDP reading between October and December was the result of a positive contribution from foreign trade – with exports outstripping imports – which was counterbalanced by a negative contribution from domestic demand, ISTAT said.
It gave no numerical breakdown of components with its preliminary estimate but said industry had expanded, while services and agriculture had declined.
Prior to Thursday’s data, most analysts and international bodies were forecasting Italy’s 2025 growth at between 0.7% and 1%.
ISTAT confirmed its previous data for the third quarter at flat quarter-on-quarter, but revised up the year-on-year growth rate to 0.5% from 0.4%.
(Reporting By Gavin Jones, graphic by Stefano Bernabei)
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