Italian industry output jump allays recession fears -Breaking
© Reuters. FILE PHOTO – A Liebherr worker wears a mask while working in the factory, one day after it reopened. This is as Italy stages a national lockdown because of the spread of corona.
Valentina Consiglio & Gavin Jones
ROME (Reuters – Italy’s industrial output rose 1.6% in April after a 0.2% increase in March. This boosts growth prospects in the second quarter.
Although the third-largest economy in the Euro Zone still has many challenges, its performance seems better than predicted a few months back when economists forecasted a recession due to surging prices and the growing tensions surrounding the conflict in Ukraine.
According to Reuters analysts survey, April’s increase in production was unexpected. This month marked the third successive monthly rise.
National statistics bureau ISTAT updated March’s data to reflect a flat reading.
Intesa Sappaolo, economist Paolo Mameli said that Italian manufacturing has shown more resilience to the shock of war than was expected.
He said that the country seems less affected than other countries in the eurozone by difficulties in procuring raw materials and component, possibly due to a lower dependence on Asia and Eastern Europe for its supply chains.
According to national statistics bureau ISTAT, April’s output increased by 4.2% year-on-year, while February-toApril saw a 2.2% increase compared to the three months prior.
Intesa Sanpaolo stated that Italy’s industrial output has increased by 4.8% in February 2020, which was the month prior to the COVID-19 pandemic. This compares to a 0.8% increase in Spain, and falls of 5.4% and 7.3% respectively in France and Germany.
But, Italy’s large service sector was far less stable than expected and Italian gross domestic products growth is continuing to be below most other eurozone peers.
ISTAT reports that the first quarter GDP rose 0.1% compared to the three previous months. This is after revising a preliminary 0.2% drop.
Although the quarter’s first reading was very weak, it still provided relief to Prime Minister Mario Draghi (and his government) considering the fact that the Bank of Italy in April had predicted a 0.7% GDP contraction.
Friday’s central bank reduced Italy’s year-end growth outlook to 2.6%, from the 3.8% forecast made in January. This latest forecast is lower than the 3.1% government projection made in April.
Bologna-based Prometeia, a think tank said Friday that industrial production would likely drop in May and stay volatile for the next few months. Intesa Sanpaolo predicted some short-term weakness.