Italy's economy grows broadly as expected in fourth quarter, beats forecast for 2016

[ROME] Italy's economy grew moderately in the fourth quarter of last year thanks to firm domestic demand, while full year 2016 growth came in slightly above the most recent official forecast, data showed on Tuesday.

Gross domestic product rose a quarterly 0.2 per cent at the end of the year, following a 0.3 per cent rise in the July-to-September period, and was up 1.1 per cent on an annual basis, national statistics bureau ISTAT reported.

That compared with an average forecast of a 0.2 per cent rise quarter-on-quarter, up 1.0 per cent year-on-year, in a Reuters survey of 27 analysts.

Third quarter growth was confirmed as having risen 0.3 per cent quarter-on-quarter, but the annual rise was revised up to 1.1 per cent from 1.0 per cent previously reported.

ISTAT said the fourth quarter expansion was due to domestic demand, while trade flows were a drag on growth.

It gave no numerical breakdown of components with its preliminary estimate, but said industry and services had grown while agriculture had contracted.

Over the whole of last year the economy grew 1.0 per cent from 2015 after adjustments for the number of days worked, ISTAT said.

Not adjusted for the number of working days, growth stood at 0.9 per cent, following an unadjusted 0.7 per cent increase the year before.

International growth comparisons published at the European Union level are made using data not adjusted for the number of days worked.

The 2016 expansion of 0.9 per cent is only around half the euro zone's estimated rate, leaving Italy in its customary position as one of the most sluggish economies in the 19-nation currency bloc.

The most recent official forecast by the government of former Prime Minister Matteo Renzi was for unadjusted growth of 0.8 per cent last year.

There were two less working days in 2016 than 2015.

ISTAT will issue another estimate of unadjusted full year 2016 growth on March 1 together with 2016 public finance data.

Mr Renzi quit as prime minister in December after losing a referendum on constitutional reform, and was replaced by his former foreign minister Paolo Gentiloni.

The government is forecasting that growth will strengthen marginally to 1.0 per cent this year.

The European Commission on Monday forecast 0.9 per cent, putting Italy in last place among all the 28 European Union nations for which it issued forecasts.

So called "acquired growth" at the end of 2016 stood at 0.3 per cent.

This means that even if GDP were to be flat quarter-on-quarter throughout this year, over the whole of 2017 it would still be up 0.3 per cent from 2016.

REUTERS