Italy's economy maintained firm growth in the second quarter, in line with expectations, thanks to healthy domestic demand which offset a negative contribution from trade, data showed on Wednesday. Gross domestic product rose 0.4 percent from the previous three months, national statistics institute ISTAT reported, the same rate as seen in the first quarter, leaving Italy on track to exceed its official 2017 growth target of 1.1 percent.
Italy faces a national election early next year and the strengthening economy may help the chances of the ruling Democratic Party if it produces a noticeable increase in employment and higher incomes and living standards. On a year-on-year basis, GDP was up 1.5 percent, accelerating from a 1.2 percent rise in the first quarter and posting the fastest year-on-year rate since the second quarter of 2011.
A Reuters survey of 22 analysts had pointed to a 0.4 percent quarterly increase, up 1.4 percent year-on-year. ISTAT said the GDP expansion was based on domestic demand, while trade flows had produced a modest drag on growth. It gave no numerical breakdown of components with its preliminary estimate, but said industry and services had contributed to growth, while agriculture had been negative.
The government of Prime Minister Paolo Gentiloni forecasts 2017 growth of 1.1 percent, up from the 0.9 percent growth seen last year but leaving Italy in its customary position among the euro zone's most sluggish economies. However, recent data has been better than expected and the government is expected to increase its forecast to around 1.4 percent when it presents its 2018 budget in the autumn.
ISTAT will issue definitive second quarter GDP data on September 1. Its definitive data for the first quarter was sharply revised up from a preliminary estimate of 0.2 percent, improving the outlook for the whole year. So called "acquired growth" at the end of the second quarter stood at 1.2 percent, ISTAT said.