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Consumption Contributes Positively To In Line Q/Q GDP Print

ITALY DATA

Italy quarterly Q1 GDP confirmed flash estimates at 0.3% Q/Q (vs 0.1% prior), while the annual figure was revised a tenth higher to 0.7% Y/Y (vs 0.7% prior).

  • The details of the final release confirm that net exports were the largest contributor to GDP in Q1, adding 0.7pp to the quarterly growth rate.
  • However, we note that inventories dragged down the domestic demand component by 0.7pp, offsetting the positive effect from net exports.
  • That means that domestic demand ex-inventories contributed 0.3pp in total: Consumption 0.2pp, investment 0.1pp and government spending 0.0pp.
  • The positive contribution of consumption comes despite weak developments in retail sales and consumer confidence through 2024. The resilient labour market, where the unemployment rate recently reached a new all-time low, likely supported consumption in Q1.
  • Indeed, consumption printed above consensus expectations on an annual basis at 0.1% Y/Y (vs -0.2% cons). At present, analysts expect a -0.2% Y/Y development in Q2, but these estimates may be revised higher in time.
  • Additionally, the 0.5% Q/Q growth in gross fixed capital investment was driven by a 1.7% Q/Q rise in construction investment (probably a function of the well-documented and controversial Superbonus scheme).
  • We will return with an analysis of the GDP deflator and its components early next week.

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Italy quarterly Q1 GDP confirmed flash estimates at 0.3% Q/Q (vs 0.1% prior), while the annual figure was revised a tenth higher to 0.7% Y/Y (vs 0.7% prior).

  • The details of the final release confirm that net exports were the largest contributor to GDP in Q1, adding 0.7pp to the quarterly growth rate.
  • However, we note that inventories dragged down the domestic demand component by 0.7pp, offsetting the positive effect from net exports.
  • That means that domestic demand ex-inventories contributed 0.3pp in total: Consumption 0.2pp, investment 0.1pp and government spending 0.0pp.
  • The positive contribution of consumption comes despite weak developments in retail sales and consumer confidence through 2024. The resilient labour market, where the unemployment rate recently reached a new all-time low, likely supported consumption in Q1.
  • Indeed, consumption printed above consensus expectations on an annual basis at 0.1% Y/Y (vs -0.2% cons). At present, analysts expect a -0.2% Y/Y development in Q2, but these estimates may be revised higher in time.
  • Additionally, the 0.5% Q/Q growth in gross fixed capital investment was driven by a 1.7% Q/Q rise in construction investment (probably a function of the well-documented and controversial Superbonus scheme).
  • We will return with an analysis of the GDP deflator and its components early next week.