Italy: Consumption and inventories led modest 3Q15 GDP expansion - ING

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  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Paolo Pizzoli, Research Analyst at ING, notes that in 3Q15 the Italian economy grew by a modest 0.2% QoQ (0.8% YoY revised from 0.9%).

    Key Quotes

    “Private consumption and inventory accumulation proved to be the main growth drivers, both providing a 0.3% quarterly contribution, followed by public consumption (0.1% contrib.), whilst the main drag came from net exports (-0.4% contrib.), with private investment subtracting an additional 0.1%.”

    “The picture provided by the GDP release remains that of an unbalanced recovery, and risks to future developments remain. For the time being private consumption looks set to remain the main driver, propelled by the ongoing recovery in real disposable income, but with some caveats. If the recovery in disposable income has thus far been mainly driven by the turnaround in employment, recent labour market data suggests that support from that area is losing some steam.”

    “Earlier this morning, Istat released October employment data, which recorded the second 0.2% monthly contraction in a row of employment, with former employed flowing into the pool of inactives rather than into unemployment, which also contracted. The resulting marginal fall in the unemployment rate to 11.5% (from 11.6% in September) is only partially comforting. With the issue of NPLs still unresolved at a systemic level, and with the credit cycle’s recovery still in its infancy, a swift pick up in private investment seems unlikely for the time being.”

    “Finally, lingering uncertainty surrounding the international backdrop is likely still weighing on export demand, only partially compensated by the weakening euro. Thus, this pattern of growth has a decent chance of being confirmed in 4Q15.”

    “The good news is that confidence indicators, as confirmed by consumer confidence and, today, by the manufacturing PMI, remain upbeat and are still consistent with another GDP expansion in 4Q15. We tentatively confirm our 0.8% for average 2015 growth, with a marginal risk of a 0.7% outcome should 4Q growth disappoint.”
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