Italy GDP Q3 2007

Well, a positive surprise on the upside for a change, since Italian economic growth accelerated in the third quarter, powered by consumer spending on services and manufactured goods, according to the report recently released by ISTAT.

Gross domestic product rose 0.4 percent from the second quarter, when it grew 0.1 percent, and expanded 1.9 percent when compared with Q3 2006.






Where we go from here is really anyone's guess, but there must be strong downside risks. Claus Vistesen has quite a comprehensive summary of the Q3 eurozone situation here, and Morgan Stanley's Vladimir Pillonca is hardly optimistic:

The Italian – and global – growth outlook seems to be darkening every day, despite the expected bounce-back of growth in the third quarter. We forecast Italian growth to slow sharply next year, to just 1.2%Y, from 1.8%Y this year, and we don’t anticipate a recovery to gather traction until the second half of next year. Risks are skewed to the downside. The possibility of a growth recession next year – defined as two or more quarters of negative quarter-on-quarter growth – is not a remote one.

as he says:

Consumer spending looks set for a slowdown after an unsustainably strong first half of the year. After all, wages are barely rising once we account for inflation, and both tax pressure and interest rates have risen in the recent past. Forward-looking consumers are likely to react to a more uncertain future, by allowing their savings to rise and their consumption growth to fall.

Is he clairvoyant or something, since this is exactly what the ISAE survey is showing consumer expectations to be at this point (and Pillonca's piece was written before this data release).

I will try and find the time to do a more in-depth analysis of Italian GDP when the full results are published in early December.