World Economy

Italy Showing Signs of Improvement

ISTAT highlighted a modest pick-up in the manufacturing sector.
ISTAT highlighted a modest pick-up in the manufacturing sector.

It has been confirmed that Italy’s economy grew by just 0.2% in the fourth quarter of last year from the previous three month period.

That means for all of 2016 it expanded by 1% year-on-year which was slightly worse than the 1.1% initially calculated last month by the country’s national statistics institute ISTAT, Euronews reported.

The figure is reassuring for the government of Prime Minister Paolo Gentiloni, who is forecasting 1% economic growth in 2017.

Italy is the eurozone’s third largest economy and the region’s most chronically sluggish due to years of recession, high unemployment and towering debt.

ISTAT said Italy’s GDP for 2016 was still 7% lower than at the start of the economic crisis in 2008 despite two years of recovery.

Early in February, in its monthly economic bulletin, ISTAT said Italy’s economy showed signs of improving in the coming months. The agency highlighted a modest pick-up in the manufacturing sector. “A recovery in the manufacturing sector is strengthening, suggesting improvement in families’ purchasing power and an increase in investments,” ISTAT said at the time.

That sentiment was echoed in an economic report by the Organization for Economic Cooperation and Development.

Also on Friday a newly released survey results showed that Italy’s service sector grew at its fastest rate for more than a year in February.

Meanwhile, the Italian retail sector has seen a €7.7 billion ($8.18 billion) drop in total sales in the period 2010-2016, according to a report by the Italian Confederation of Trade, Tourism, and Service Companies based on Istat data.

Traditional (small) retailers have been hit the hardest, with sales down by €6.9 billion over six years (-9.5%), while large retailers have performed slightly better, limiting the drop in turnover to €0.8 billion (-1.2%).

Sales of food and beverages were the only items of expenditure to see growth (+0.1%). In the food retail segment, small retailers have seen revenues tumble by €2.4 billion in the reference period (-11.0%), contrary to large retailers who increased turnover by €2.3 billion (+2.7%).

On the other hand, in the non-food retail segment, both small retailers (sales down by €4.5 billion or -9.3%) and large retailers (sales down by €3.1 billion or -6.5%) have registered a large drop.

However, upon closer examination of the data, it is clear that only the discount channel increased sales, while the other food retailers mainly recorded a negative result, indicating a clear shift of consumers towards savings.


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