Italys economy contracts by 0.2% in Q1 as recession risks increase

p First GDP contraction since Q4 2020 pdivdivdiv classBodysc17zpet90 cdBBJodiv

p Trade flows drag down GDP in Q1p

pROME, April 29 Reuters – Italys economy shrank by 0.2 in the first quarter from the previous three months, preliminary data showed on Friday, with activity hit by the coronavirus, high commodity prices and the war in Ukraine.p

pOn a yearonyear basis, first quarter gross domestic product in the euro zones third largest economy was up by 5.8, statistics bureau ISTAT said, reflecting the depressed GDP level a year ago due to the COVID19 pandemic.p

pThe first quarter result, which marked the first decline in GDP since the fourth quarter of 2020, exactly matched the median forecast in a Reuters survey of 22 analysts.p

pLooking ahead, the outlook has been clouded by events in Ukraine which have sapped business and consumer confidence and exacerbated already surging prices and supply shortaqes.p

pPrime Minister Mario Draghis government this month revised down its 2022 economic growth forecast to 3.1 from a 4.7 projection made last September.p

pThe latest 3.1 forecast is considered optimistic by most independent bodies. Italys employers lobby Confindustria has said the economy is heading for recession, defined as two consecutive quarters of declining GDP.p

pAfter sinking by a record 9.0 in COVIDhit 2020 and posting a partial rebound of 6.6 in 2021, this year Italian GDP was expected to finally return to its prepandemic level, an outcome which may now be in doubt. p

pISTAT said the first quarter decline was due to negative trade flows, while domestic demand increased.p

pIt gave no numerical breakdown of components with its preliminary estimate, but said industry had stagnated and services contracted. Agriculture, on the other hand, showed some growth.p

pISTAT revised the fourth quarter of last year to show a 0.7 quarteronquarter rise, previously reported as 0.6. The yearonyear rate was confirmed at 6.2.p

pISTAT gave the following details on Italian GDP in the last three quarters: p

pQ1 2022 Q4 2021 Q3 2021p

pQQ pct change 0.2 0.7r 2.5 p

pYY pct change 5.8 6.2 3.9p