Italy Economy Slows, Making Return to Sustainable Growth Harder

  • GDP rose 0.2 percent in the third quarter, missing estimates
  • Lackluster growth in line with other euro area economies

Italy’s economy expanded at a slower pace than forecast in the third quarter, signaling difficulties in returning to sustainable growth.

Gross domestic product expanded 0.2 percent in the three months through September, Rome-based statistics agency Istat said in a preliminary report on Friday. That was below the 0.3 percent estimate of 20 analysts in a Bloomberg survey. GDP rose 0.9. percent from a year earlier, the report said.

“The pace of recovery is still dragging its feet in the face of converging external supports, namely a more competitive euro and lower global crude oil prices when compared with a year earlier,” Raj Badiani, senior economist at IHS Global Insight Ltd, said earlier this week.

The euro region’s third-biggest economy is benefiting more than other member countries from the European Central Bank’s quantitative easing program, Bank of Italy Governor Ignazio Visco said in a speech in London on Wednesday. Visco cited an April study from the Rome-based central bank’s economists saying that the bond-purchase program may boost Italy’s GDP as much as a total 1.4 percentage point in the 2015-2016 period.

Italy’s GDP expanded 0.4 percent in the first quarter, and 0.3 percent in the second three months of this year.

Italian September industrial output rose less than economists expected, signaling the risk of a possible slowdown in the economic pick up. Italy’s GDP will expand 0.9 percent this year with 1.4 percent growth foreseen in 2016, Istat said in a statement on Nov. 5.

Prime Minister Matteo Renzi, who has promised to lower taxes and cut the national debt to help the country’s economy, repeatedly said that his government’s policies will boost employment in the coming months. During the third quarter Italy’s unemployment dropped to below 12 percent for the first time in two and a half years.

GDP in Germany, the region’s powerhouse, rose a seasonally adjusted 0.3 percent in the third quarter, after increasing 0.4 percent in the previous three months, the Federal Statistics Office in Wiesbaden said earlier on Friday. French GDP also expanded 0.3 percent, having stagnated in the April-June period, a separate release showed.

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