Will the Italian Economy Surpass Growth of 1.5% in 2016?
Will Growth Favor Developed or Emerging Markets in 2016?
Italian GDP grew 1.8% in the September quarter
Like Germany (EWG), Italy (EWI) is one of the leading nations in the Eurozone (EZU) (VEA). For the September quarter, Italian GDP (gross domestic product) grew 0.2% as compared to 0.3% in the previous quarter. On an annual basis, the Italian economy grew 0.80%, higher than the 0.60% recorded in the earlier quarter. The increase in GDP is mainly attributed to an increase in household expenditure and an increase in inventories that offset a decline in foreign trade.
Italian trade surplus has narrowed in October
In October 2015, Italy’s trade surplus fell to 4.8 billion euros as compared to 5.3 billion euros in October 2014. Exports went down by 1.4% to 36.8 billion euros while imports were stable at 32.0 billion euros in October. Though exports have declined in October, industrial production is trying to regain strength.
Industrial production jumps 2.9% from a year ago
Industrial production in Italy rose 2.9% year-over-year (or YoY) in October 2015 as compared to a 1.8% increase in the previous month. On a monthly basis, industrial production increased 0.5% in October as the manufacture of consumer goods rose by 1.4%, intermediate goods grew by 0.9%, and capital goods rose by 0.6%.
With a rise in industrial output, French ADRs (American depository receipts) Ferrari (RACE), Eni (E), and STMicroelectronics (STM) were up 2.3%, 0.07%, and 1.2%, respectively, on December 21.
Italian inflation rate rose 0.1% in November 2015
While industrial output rose in Italy, the consumer prices struggled even after an increase in food prices.
On an annual basis, the Italian inflation rate rose 0.1% in November 2015, up from 0.3% in the previous month. In November, the cost of food, accommodation, health, and leisure activities rose at a slower pace while prices of housing and transportation continued to drag the inflation down. On a monthly basis, consumer prices fell 0.4% in November.
With manufacturing activity rising in Italy, Italian economic growth may rebound in the next year. Also, with the extended stimulus, it may be able to surpass a growth rate of 1.5% in 2016 as projected by the Bank of Italy.
We’ll cover the French economic outlook in the next article.
Browse this series on Market Realist: