Italy: GDP growth gains steam in Q2 amid the easing of restrictions
According to a preliminary estimate, GDP growth accelerated to 2.7% in seasonally- and working-day adjusted terms in the second quarter following Q1’s 0.2% expansion, beating market analysts’ expectations of a 1.3% rise. Moreover, the economy rebounded on an annual basis in Q2, with GDP increasing 17.3% and contrasting the previous period’s 0.7% fall—although the reading was flattered by a favorable base effect.
The quarterly increase came largely on the back of the gradual lifting of Covid-19 restrictions, with activity in the industrial and services sectors expanding in the quarter. On the expenditure side, provisional estimates show that both domestic demand and the external sector contributed positively to the overall reading.
Commenting on the outlook for economic activity, Loredana Maria Federico, chief Italian economist at UniCredit, reflected:
“Overall, we expect the expansion in GDP will continue in Q3 2021. Following the stronger-than-expected Q2 2021 GDP growth announced today—as recovery in services activity probably proved to happen quicker than initially thought—this could underpin upside risks to our 5.0% GDP growth forecast for 2021 and an acceleration in GDP recovery to a pre-pandemic level, which we currently expect will happen in Q3 2022. Still, whether strong GDP growth for Q3 2021 will be confirmed also hinges on Italy’s ability to make further progress in its vaccination campaign in order to contain the spread of the Delta variant—which already caused an increase in infections in July—and to avoid new limitations being imposed or occurring voluntarily.”