Italy's Economy Contracts by 0.1 Percent in Q4, Raising Recession Fears

On a year-on-year basis, fourth quarter gross domestic product in the euro zone's third largest economy was up 1.7%, national statistics bureau ISTAT said.

A Reuters survey of 23 analysts had forecast a 0.2% quarterly decline and a 1.6% rise compared with the year earlier.

Over the whole of last year, GDP growth, adjusted for the number of working days, came in at 3.9%.

Looking ahead, the outlook has been clouded by sky-high inflation and energy costs, exacerbated by the war in Ukraine, which have sapped business and consumer confidence, crimped investments and hit families' spending power.

Rome is officially forecasting full-year growth of just 0.6% this year.

The Treasury estimated in November that the economy would contract in the fourth quarter of last year and also in the first quarter of 2023, dumping the country in recession - defined as two consecutive quarters of falling GDP.

ISTAT said the fourth quarter saw a decline in domestic demand, which negatively outweighed a positive contribution from trade flows.

It gave no numerical breakdown of components with its preliminary estimate, but said industry and agriculture had declined during the quarter, while services grew.

ISTAT confirmed a 0.5% quarter-on-quarter growth rate for the third quarter but revised up the Q3 annual expansion to 2.7% from a previously reported 2.6%.

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