Under pressure from the repercussions of raising interest rates and weak domestic demand, the Italian economy grew in the second quarter at the slowest pace since the first quarter of 2021, recording a growth of 0.4% on an annual basis, compared to 0.6% in previous estimates, after reviewing preliminary data downward.
The Italian national statistics office, ISTAT, said on Friday that the Italian economy contracted by 0.4% in the second quarter, compared to the previous three months.
The preliminary estimate released by the Italian national statistics office, ISTAT, on July 31 indicated a contraction of 0.3% in GDP, against analysts’ expectations for a flat reading.
The downward revision casts a shadow over the full-year forecast, as Prime Minister Giorgia Meloni’s right-wing government prepares to lay out its 2024 budget.
Italian ministers have repeatedly criticized the European Central Bank for sharply raising interest rates, saying its policy threatens to plunge the euro zone into recession.
GDP data showed investment and government spending contracted sharply in the second quarter compared to the previous three months, while consumer spending remained stagnant.
Imports and exports decreased by 0.4%, which means that trade flows did not contribute in any way to growth.
The sharp reversal in the second quarter comes after a strong start to the year for what were the slowest eurozone economies since the launch of the single currency.
The GDP gains in the first quarter were unrevised at 0.6% qoq and 2% yoy.
Rome officially forecasts full-year 2023 growth of 1%, slowing sharply from buoyant levels of 3.7% in 2022.