Italy Q4 GDP falls 1.9% q/q as domestic demand slumps

Italy's economy shrank 1.9% in the fourth quarter of last year from the previous three months, national statistics bureau ISTAT said on Wednesday, as coronavirus restrictions weighed on domestic demand.

ISTAT slightly raised its preliminary estimate of a 2.0% fall in gross domestic product, issued on Feb. 2.

On a year-on-year basis, fourth quarter GDP was confirmed at -6.6%.

The third quarter, covering summer months in which COVID restrictions were largely lifted, was revised to show a 15.9% quarter on quarter rise and a 5.2% year-on-year drop. These were previously reported at 16.0% and -5.1% respectively.

Earlier this week ISTAT reported that over the whole of 2020 GDP shrank by 8.9%, its steepest contraction since World War Two, taking Italy's inflation-adjusted GDP level back to where it stood in the late 1990s.

The breakdown of GDP components in the fourth quarter showed consumer spending fell 2.7% quarter-on-quarter while government spending rose 1.5% and investments edged up 0.2%.

Overall, domestic demand net of inventories subtracted 1.3% from GDP.

Imports rose 5.4%, easily outweighing a 1.3% increase in exports.

Looking ahead, Rome officially forecasts a rebound of 6% this year, although analysts say this will have to be revised down as the ongoing COVID-19 emergency continues to blight economic prospects.