Italian Economy Expands, Boosting Optimism on Recovery

(Bloomberg) -- Italy’s economic recovery extended for a tenth straight quarter, boosting optimism that growth can become sustainable this year amid a rise in industrial production.

Gross domestic product expanded 0.4 percent in the three months through June, the same as in the first quarter, Rome-based statistics agency Istat said in a preliminary report on Wednesday. That matched the median of 26 analysts’ estimates in a Bloomberg survey.

The GDP performance “is the result of an increase in the added value of manufacturing and services,” said Istat which will provide a detailed breakdown of the GDP performance on Sept. 1.

Should the economy keep rising at the same pace in the rest of 2017, Italy’s GDP would grow an annual, workday-adjusted 1.5 percent this year, Istat also said.

Although still lagging behind euro-area peers, the Italian economic recovery looked more convincing this year with industrial output expanding a seasonally adjusted 1.1 percent in the second quarter and a rise in exports of Italian goods over the same period despite the stronger euro.

In the three month through June, the euro region’s economy expanded 0.6 percent from the previous quarter and was supported by continued growth in Germany, the European Union statistics office Eurostat in Luxembourg said in a separate report on Wednesday.

Widening ‘Gap’

Italy’s recovery “is being confirmed by this report though not at a pace that can convincingly relaunch investments and absorb joblessness,” said Andrea Goldstein, chief economist at Bologna-based researcher Nomisma. “The gap between Italy and its main commercial and financial partners widens almost relentlessly each quarter.”

The euro-region’s third-largest economy will expand 1.2 percent this year and 1 percent in both 2018 and 2019, according to an earlier separate survey conducted this month by Bloomberg News. This will allow for a lower unemployment with the jobless rate averaging 11.2 percent this year, the lowest since 2012, before dropping further to 10.3 percent in 2019, the survey also suggested.

While investors rejoice, consumer confidence remains subdued regardless of recent improvements in the labor market. Most households fail for now to share the dividends of the recovery as wages remain on average lower than two decades ago after taking a dip during the financial crisis, the International Monetary Fund said late last month in a report.

--With assistance from Andre Tartar

To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net.

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Kevin Costelloe