The growth of the Italian economy has stopped and the phase of weakness will continue in the coming months. This was stated by Istat in its latest monthly bulletin on the economic conditions of our country, explaining that the negative contribution of internal demand and the drop in production in the industrial sector weigh first.
GDP
After the growth recorded up to March of this year, in the second quarter of 2016 the gross domestic product suffered a setback, showing a zero change on a quarterly basis. The change compared to the second quarter of 2015 was 0,8%, down on the 1% recorded in the first quarter.
Net foreign demand (+0,2 percentage points) made a positive contribution to the cyclical change in GDP: imports increased by 1,5% and exports by 1,9%. The contribution of investments and national final consumption, on the other hand, was nil.
The dynamics of domestic demand was characterized by the substantial stability of national final consumption, a synthesis of a 0,1% growth in household consumption and a 0,3% drop in public administration spending, and by the cyclical contraction of fixed investments gross (-0,3%), mainly determined by the decrease in expenditure on machinery, equipment and other products (-0,8%). Investments in construction recorded a zero change while the component of means of transport marked a positive change (+1,4%).
DEFLATION
Furthermore, the scenario for the coming months "does not allow us to hypothesize significant recoveries in price dynamics". The deflationary phase continued also in August. The preliminary estimate of the consumer price index for the entire national community confirmed a negative annual change for the seventh consecutive month, albeit close to zero (-0,1%, as in July). The dynamics of overall inflation continues to be strongly influenced by the trend in the prices of energy products which are still falling on a trend basis, albeit slightly attenuating (-6,5%, from -7% in July).
CONSUMER CONFIDENCE
As for consumer confidence, in August it showed a further contraction after the partial recovery in July: since January the indicator has lost about 9 points. Consumer expectations marked a "general worsening as a result of negative judgments on the economic climate and unemployment".
INDUSTRY
Industry in the strict sense showed signs of weakness, recording a significant reduction in added value (-0,8% compared to the first quarter). Expectations for the next few months are still weak: the climate of confidence in manufacturing firms actually worsened in August, showing no signs of particular vivacity among the components, underlines Istat again.
The added value of construction, on the other hand, recorded a slight cyclical increase (+0,1%), after the sharp decline recorded in the previous quarter (-0,5% compared to the fourth quarter of 2015). In August, the climate of confidence worsened, remaining however at the highest levels in recent months.
SERVICES
The services sector also recorded a positive cyclical change (+0,2), confirming an expansive trend that has persisted for 5 quarters, albeit with differentiated trends at sectoral level. Financial and insurance activities recorded the most marked decrease (-0,6%), albeit less intense than in previous quarters.
Minor declines characterized the information and communication services and the Public Administration, defence, education and health (-0,2% for both sectors). Significant increases concern professional and support activities (+0,5%), trade, transport and accommodation (+0,4%) and real estate activities (+0,4%).
