The Italian Economy Contracts Again in Q4 2009

Well, it isn’t only my German economy Q4 call, or my Japanese economy one which look OK right now, this Italian one also now seems very much to the point.

In fact, as I suspected it might, the Italian economy went back into contraction mode in the last three months of 2009.

Italy’s economy shrank by 0.2 percent in the fourth quarter of 2009, inverting the growth it had experienced in the third quarter, according to national statistics agency Istat in a preliminary forecast. Italian gross domestic product (GDP) shrank by 0.2 percent compared to the third quarter when adjusted for seasonal variations.

Italy’s GDP shrank by 4.9 percent in the 2009, a result which was slightly worse than than the 4.8 percent contraction the Italian government had predicted. The fourth quarter figure was worse than had been expected by economists who had forecast a 0.1 percent growth, according to a consensus polled by Dow Jones Newswires. Istat blamed the decrease on a fall in the value added by Italian industry. In January, the Italian government revised its economic growth forecast for 2010 upward – from 0.7 percent to 1.1 percent.

Perhaps the best way of putting the seriousness of Italy’s situation in some kind of perspective is to say that GDP levels are still below those of early 2003. My opinion is that even in the best of cases Italian trend GDP growth is now below 0.5% per annum, and indeed it may well be approaching zero.

This entry was posted in A Fistful Of Euros, Economics and demography, Economics: Country briefings by Edward Hugh. Bookmark the permalink.

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

8 thoughts on “The Italian Economy Contracts Again in Q4 2009

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  2. It was off prediction by 0.3%. Is this significant? In other words, does this mean anything else but that things are bad, but only about as bad as expected?

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  4. jeronimo, the spain gdp grew because of an absurd real estate bubble feulled by people taking on debt far beyond their means. the chart’ll never show that, but that was the driver behinf GDP grwoth in Spain, it’s a nasty four letter word: DEBT. now¡s the time to pay the piper.

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