Italy: The economy will contract for three consecutive quarters-Treasury | Photo credit: Shutterstock
ROME, Oct 3 (Reuters) – Italy’s economy likely contracted in the third quarter and gross domestic product will continue to decline in the next two quarters, according to the latest Treasury forecast.
The eurozone’s third-largest economy, hit by soaring energy costs and record inflation, is heading into a technical recession, according to the forecast.
The economy was stronger than expected in the first half of the year, but the “Economic and Financial Document” (DEF) published on Friday evening indicates that a trend reversal has already begun.
The latest Treasury forecasts factor in a “slightly negative” GDP in the third and fourth quarters, due to the contraction of the industrial sector.
“A further decline in GDP is forecast for the first quarter (of 2023), followed by a recovery from the second quarter,” according to the DEF.
According to the document, the recovery would be driven by an increase in international demand, a drop in gas prices, an increasing contribution to GDP from European funds from the recovery plan and the reforms promised in Brussels.
The outgoing government of Mario Draghi on Wednesday reduced its growth estimate for next year to 0.6% due to the vertiginous rise in energy costs, against 2.4% previously. (Report Gavin Jones, French version Laetitia Volga, edited by Kate Entringer)