Italy Q2 GDP slows to 0.2% q/q, supported by domestic demand

ROME (Reuters) -Italy's economic growth slowed to 0.2% in the second quarter from the previous three months in line with forecasts, driven by domestic demand, preliminary data showed on Tuesday.

The figure came in after an unrevised 0.3% increase in January-March.

On a year-on-year basis, second quarter gross domestic product in the euro zone's third largest economy was up 0.9%, national statistics bureau ISTAT said, also in line with a Reuters survey.

"From the demand side, there is a positive contribution by the domestic component (gross of change in inventories) and a negative one by the net export component", ISTAT said.

It gave no numerical breakdown of components with its preliminary estimate, but said services had supported the growth whereas both industry and agriculture had made a negative impact.

"We think that part of this weakness could be reversed, and that gradual GDP acceleration is likely in 3Q24, mainly thanks to strengthening of demand," said Loredana Federico, chief Italian economist at UniCredit.

The statistics bureau signalled that the quarterly increase was the fourth consecutive one, with "acquired variation growth" at the end of the second quarter at 0.7%.

That means that if quarterly GDP growth were flat for the rest of 2024, full year growth would still come in at 0.7%.

Italy's government forecast in April that the economy would expand 1% this year, broadly in line with last year's 0.9% growth rate.

Italian think tank Prometeia said it maintained a "cautious optimism", even though data were confirming "the critical elements of this economic phase".

According to data published on Tuesday, GDP in the euro zone rose by 0.3% quarter-on-quarter in January-March.

Year-on-year Italian growth in the first quarter was slightly lowered to 0.6% from a previously reported 0.7%.

ISTAT will release final Q2 GDP data on September 2.

(Reporting by Antonella Cinelli, editing by Keith Weir)