Italian Output Unexpectedly Rises in Boost For Growth Outlook

  • Index rises for second month, economists expected 0.1% decline
  • Basic metals, machinery equipment led August production rise

Italian industrial production unexpectedly increased for a second month, supporting expectations of a revival in economic recovery ahead of a key referendum for Prime Minister Matteo Renzi’s government.

Output rose 1.7 percent in August from the previous month when it increased 0.7 percent, statistics agency Istat said Monday in Rome. The median estimate in a Bloomberg survey of 17 analysts called for a 0.1 percent drop. On an annual, work-day adjusted basis, production was up 4.1 percent in August.

Production of basic metals rose 4.8 percent on a monthly basis in August, while machinery equipment increased 5.9 percent.

Premier Renzi is seeking to revive economic activity after growth was unchanged in the second quarter. The budget law for 2017 will include a reduction of corporate tax Ires to 24 percent from 27.5 percent currently, Finance Minister Pier Carlo Padoan told lawmakers last week.

There are increasing concerns that voters will turn down a constitutional reform referendum on Dec. 4, an outcome that could seriously hinder his government.

Italy’s weak recovery is due in particular to low level of investments, Bank of Italy Deputy Director General Fabio Panetta said in an Oct. 5 speech in Rome.

The International Monetary Fund cut Italy’s growth forecasts for the second time in less than three months last week as it cited investors’ concerns over the outlook for the country’s banking system. Italy’s gross domestic product will expand 0.8 percent this year and 0.9 percent next, the Washington-based IMF estimated on Tuesday in its World Economic Outlook.

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