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Experts expect Italian growth to continue

The revised release of Italian GDP data for the first quarter of 2024, which now includes the demand breakdown, helps shed some light on growth developments for the rest of 2024.

Demand breakdown reveals that inventories acted heavily as a drag. The 0.3% quarterly GDP gain was the result of a 0.7% contribution of net exports (due to weak imports, rather than strong exports) and of a negative 0.4% contribution from domestic demand gross of inventories.


When the preliminary data was released, ING had suspected that inventories might have played a big role; today's data shows that this indeed was the case. Inventory changes subtracted 0.7% from quarterly growth, more than compensating for the 0.2% push from private consumption and the 0.1% from private investment.

Private consumption pattern seems to be changing. After the sharp 0.8% growth drag from private consumption in the fourth quarter of 2023, a decent rebound was in the cards given the positive developments in disposable incomes. Here, a re-composition in the consumption pattern seems to be in the making, out of services and into non-durable goods.

Growth looks set to continue, with upside risks linked to the inventory cycle. Looking ahead, also on the back of available qualitative data evidence for April and May, experts expect the ongoing GDP growth to continue in the second quarter, possibly at a slightly softer pace – analysts are now pencilling in a 0.2% GDP gain on the quarter, but see upward risks. In the second quarter, the drag of the dwelling construction component as the end of the 'superbonus' will be increasingly biting.

But private consumption should continue expanding, still supported by a very resilient labour market (unemployment in April at 6.9%, the lowest level since the third quarter of 2008) and subdued inflation (stuck at 0.8% in May). Upside risks rest on the possible normalisation of the inventory cycle which, by itself, would remove part of the strong drag seen in today's data.

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