In the third quarter of 2018, the Italian economy recorded no economic growth compared to the previous quarter. This is the weakest rate of GDP expansion recorded in almost four years. While no detailed breakdown of the main GDP components is available yet, in our view the disappointing Q3 growth reading is a result of the elevated level of policy uncertainty observed in Italy over the past few months. This has likely weighed on investment and consumption decisions. In addition, global trade growth has weakened this year, as a result of which tailwinds to the Italian economy from the external sector have likely moderated. No imminent pick up in Italian economic momentum is in sight, as uncertainty around the government’s fiscal policy continues to linger. The Italian economy is unlikely to grow more than +1% this year, down from +1.5% last year.
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Weekly Export Risk Outlook 31 October 2018