High Recession Risks In Italy After Negative Industrial Output Data

ROME (Alliance News) - Recession risks have increased for Italy after worse-than-anticipated ...

Alliance News 11 January, 2019 | 3:14PM
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ROME (Alliance News) - Recession risks have increased for Italy after worse-than-anticipated industrial production figures were released on Friday.

According to national statistics agency Istat, there was a month-on-month drop in industrial production of 1.6% in November.

Economists were expecting a monthly drop of only 0.3%.

"Much weaker than expected industrial production data for November support our view that Italy entered technical recession in the fourth quarter last year," Fabio Fois of Barclays bank said in a statement.

A country is in a technical recession when its gross domestic product shrinks for two quarters in a row. In the third quarter of 2018, Italy's GDP contracted by 0.1%.

GDP data for the fourth quarter of 2018 is due to be released by Istat on January 31. Several analysts have said they expect it to be negative, given Friday's industrial output statistics.

November was particularly bad for industry due to "one-off" factors such as bad weather and a bank holiday at the start of the month, according to Paolo Mameli, senior economist at Intesa Sanpaolo bank.

On top of that, the Italian economy has suffered from a slowdown in global trade and from market jitters over a government budget row with the EU, which was resolved in December.

A recession would make it harder for Italy's populist government to meet the budget discipline targets it laboriously negotiated with the European Commission.

Italian fiscal profligacy is viewed with concern in Brussels and elsewhere because the country has one of the highest debt levels in the world, equal to more than 130% of GDP.

Copyright dpa

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