World Economy

Italy Industry Output Stagnates

The government forecasts GDP grew 1.5% last year.The government forecasts GDP grew 1.5% last year.

Italian industrial output was weaker than expected in November, coming in unchanged from the month before and casting some doubt over growth prospects as the country heads for a March election.

The flat reading in November followed a 0.6% increase in October (marginally revised up from 0.5%) and a 1.4% drop in September, national statistics bureau ISTAT reported on Friday, Reuters reported.

The stagnant November figure was well below market expectations of a 0.6% rise, based on a Reuters’ survey of 15 analysts. In the three months to November, output was down 0.2% compared with the June-to-August period, ISTAT reported.

The data will be a disappointment for the ruling Democratic Party, which has been slipping in opinion polls and needs good economic news ahead of parliamentary elections on March 4.

Italian industrial output often shows a correlation with trends in gross domestic product, which rose 0.4% in the third quarter of last year, slowing from a 0.5% increase in the second.

Industrial output fell by around a quarter between 2008 and 2014, and has recovered only a small part of that during the last two years.

The government of Prime Minister Paolo Gentiloni forecasts that GDP grew 1.5% last year, which would be Italy’s strongest rate since 2010 but would still leave it in its customary position among the most sluggish economies in the eurozone.

In November, month-on-month declines in output of consumer and investment goods were offset by a marginal increase in intermediate goods and a strong increase in output of energy products, ISTAT said.

On a work-day adjusted year-on-year basis, output in November was up 2.2%, following a 3% rise in October, coming in below a forecast of +3.3% in Reuters’ poll of analysts.

With the Italian public increasingly disenchanted with the euro, the country’s parliamentary election in March could lead to the introduction of a “new lira” as a parallel currency.

Meanwhile, following Italian President Sergio Mattarella’s dissolution of parliament on December 28, 2017, Italians will vote on March 4 to elect representatives to both chambers of the country’s legislature. Ultimately, a new prime minister will assume office in an electoral landscape in which three of the four main parties in the polls favor introducing a dual currency, Wikitribune reported.

The proposed implementation of a parallel currency would leave the euro in use for all international transactions and would continue to be used by international tourists.


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