Italy escapes recession but still lags behind rest of Europe

Italy has dragged itself out of recession with economic growth of 0.2 per cent in the first quarter, the country’s statistics organisation said today.

Read more: Eurozone economy shows stronger-than-expected growth in first quarter

The quarterly figures mean the Eurozone’s third-largest economy limped to an annual growth rate of 0.1 per cent.

Italy’s economy shrunk by 0.2 per cent in the final quarter of 2018, and 0.3 per cent in the quarter before that.

Much of the recent downturn has been blamed on the battle between the coalition government – made up of the right-wing League and the populist Five Star Movement – with the European Union over the former’s budget plans.

The dispute ended before Christmas but pushed up borrowing costs and damaged confidence in the economy.

Istat, the Italian statistics body, today said that an increase in net exports helped push the economy into growth.

It said stronger output in agriculture, the industrial sector, and services also boosted the figures.

Weak domestic demand made a negative contribution to the numbers, however.

Yet analysts at BMO Global Asset Management said the country’s economy was still vulnerable.

“The debt issue is still there and has the potential to push yields on government bonds to untenable levels, prompting downgrades and impacting the country’s ability to raise funds on the bond market,” they said.

Italian GDP growth still lagged behind the wider Eurozone area, which achieved faster-than-expected growth in the first quarter of the year, increasing by 0.4 per cent compared to the previous quarter, official statistics today showed.

Read more: Economic confidence falls in Eurozone and EU as slowdown drags on

The euro has risen three per cent against the dollar, buying $1.122.