Q4 GDP was revised up by the Italian Statistical Office (ISTAT) to -0,1% QoQ (-0.2% prior).
- Details related to the composition of growth show that domestic demand was somewhat stronger than expected: personal consumption (up 0.1% QoQ) contributed by 0.1% to GDP growth as well as Gross Fixed Capital Formation (up 0.3% QoQ after the strong -1.3% QoQ contraction in Q3); external demand contributed positively with exports (up 1.3% QoQ) which gave a contribution of 0.4%.
- On the other side, inventory destocking represented a drag, subtracting 0.4% from quarter on quarter growth; Government Consumption contracted by 0.1% QoQ, representing a small drag of 0.03% , Imports grew 0.7% QoQ, subtracting 0.2% from growth.
- Over 2018, the economy expanded at an average annual rate of 0.8%: final domestic demand contributed by 1% (0.6% Investments, 0.4% Personal Consumption Expenditures, 0% Government Spending); Net Trade subtracted 0.1%; Inventories destocking subtracted 0.1%.
- 2018 was characterized by two halves in particular for domestic demand: H1 with fixed investments growing at an average quarterly pace of 0.6% QoQ, while they contracted by an average of 0.5% QoQ in H2. Finally, investment growth decelerated from 4.5% YoY in 2017 to 3.2% in 2018. Personal Consumption growth averaged 0.2% QoQ in H1, 0.1% QoQ in H1. Personal Consumption growth decelerated from 1.5% YoY in 2017 to 0.6% YoY in 2018. To be noted, the significant deceleration in exports, which declined from 6.4% YoY growth in 2017, to 1.4% in 2018, a consequence of slower global trade and weaker Eurozone growth.
- We confirm our 2019 forecasts: we keep seeing a very weak quarterly growth profile in 2019 H1, followed by a mild recovery in H2 driven by a gradual improvement in Investments and Exports. Growth in 2019 will be supported mainly by domestic demand. Net trade will have a flat contribution while we expect still a drag from inventories.
- The inflation projection for 2019 was revised down to 1.0% (1.2% prior), due to weaker January data. The inflation profile (FOI index ex tobacco), shows weakness in H1 2019, followed by a recovery later in the year, due to base effects as the quarterly pace of inflation remains broadly stable. The unemployment rate is not expected to decline considerably from the weak growth environment.