Country Economic Forecasts > Italy
Given the disappointing recent business cycle and industrial production data, we have trimmed our Q3 GDP q/q forecast to 0.1%. This follows a modest 0.2% rise in Q2 (which was a touch lower than in Q1), when net trade was a drag on activity for a second consecutive quarter, though investment contributed to growth. As a result, we now see GDP expanding by only 1.1% this year (previously 1.2%), followed by just 0.9% in 2019. We think that the more expansionary fiscal policy will be counteracted by the negative effects coming from higher interest rates, especially given the markets’ lingering concerns that the fiscal deficit could end up being more than currently targeted.
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