Italian Recession Accelerating
Yesterday we dedicated a quick post to the glaringly obvious - the complete decimation-cum-implosion of the Greek economy. Today we learn that the obvious apparently continues, following a Reuters report that according to an Italian source, Q4 GDP declined more than the 0.2% drop in Q3, and that there was no improvement in Q1 of 2012. In other words, Italy's economy is now contracting at an at least 0.3% annualized run rate. More as we get it, but it's not like any details will make the news any less bulllish, because this is obviously great news: the accelerating recession is far better than the "priced in" apocalyptic depression that the market was expecting. In other words, by simple inversion worse than expected is better than unexpected. Or something.
Italy's economy shrank in the fourth quarter of last year, probably more steeply than the 0.2 percent decline in gross domestic product posted in the third quarter, a govermnent source told Reuters on Wednesday.
If the data is confirmed by national statistics office ISTAT when it issues Q4 preliminary GDP data on Feb. 15, it will mean Italy is officially in a recession which is widely expected to continue for most of this year.
"The fourth quarter was negative for Italy's economy, probably worse than the third," said the source, who asked not to be named.
Purchasing managers' indexes have indicated falling activity in both the manufacturing and service sectors in every month since last August.
The median forecasts in a Reuters survey of around 20 analysts conducted last month pointed to a 0.6 decline in GDP in both Q4 2011 and the first quarter of 2012.
The survey pointed to a full year GDP contraction of 1.2 percent this year, far worse than the government's official forecast of -0.4 percent. The Bank of Italy expects a decline of around 1.5 percent.
Activity at the start of this year has been further slowed by truckers strikes and unusually icy weather which have disrupted factory supplies.