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Italy economic growth optimism rises

Italy economic growth optimism rises

ROME: Italy’s economic recovery extended for a tenth straight quarter, boosting optimism that growth can become sustainable this year amid a rise in industrial production.

Gross domestic product expanded 0.4% in the three months through June, the same as in the first quarter, Rome-based statistics agency Istat said in a preliminary report on Wednesday. That matched the median of 26 analysts’ estimates in a Bloomberg survey.

The GDP performance “is the result of an increase in the added value of manufacturing and services,” said Istat which will provide a detailed breakdown of the GDP performance on Sept. 1. Should the economy keep rising at the same pace in the rest of 2017, Italy’s GDP would grow an annual, workday-adjusted 1.5% this year, Istat also said.

Although still lagging behind eurozone peers, the Italian economic recovery looked more convincing this year with industrial output expanding a seasonally adjusted 1.1% in the second quarter and a rise in exports of Italian goods over the same period despite the stronger euro.

The euro-region’s third-largest economy will expand 1.2% this year and 1% in both 2018 and 2019, according to an earlier separate survey conducted this month by Bloomberg News. This will allow for a lower unemployment with the jobless rate averaging 11.2% this year, the lowest since 2012, before dropping further to 10.3% in 2019, the survey also suggested.

While investors rejoice, consumer confidence remains subdued regardless of recent improvements in the labor market. Most households fail for now to share the dividends of the recovery as wages remain on average lower than two decades ago after taking a dip during the financial crisis, the International Monetary Fund said late last month in a report.

The government of Prime Minister Paolo Gentiloni forecasts 2017 growth of 1.1%, up from the 0.9% growth seen last year but leaving Italy in its customary position among the eurozone’s most sluggish economies.

ISTAT’s definitive data for the first quarter was sharply revised up from a preliminary estimate of 0.2%, improving the outlook for the whole year. So called “acquired growth” at the end of the second quarter stood at 1.2%, ISTAT said.

This means that even if GDP were to be flat quarter-on-quarter in the last two quarters, over the whole of 2017 it would still be up 1.2% from the year before.