Italy’s economy returned to growth in the first quarter of the year, pulling clear of its third recession in a decade, while the country’s unemployment rate receded in March.
Italian GDP rose a quarterly 0.2% between January and March, and was up 0.1% on an annual basis, Italy’s national statistics bureau Istat reported.
The country’s GDP had fallen 0.1% in both the third and fourth quarters of last year, putting the eurozone’s third largest economy into what economists often call a technical recession of two straight quarters of shrinking output.
The swift return to growth, however tepid, was hailed by Italy’s coalition government, which is struggling to keep a lid on both the budget deficit and state debt as it seeks to fulfil election campaign pledges to boost welfare spending.
Istat also reported a fall in unemployment in March, with the jobless rate dropping to 10.2% from a previous 10.5% and youth unemployment down to 30.2% — its lowest reading since October 2011.
Some 60,000 jobs were created in Italy last month, while the overall employment rate climbed to 58.9% in March from 58.6% in February — its highest level since April 2008.
Italy once again lagged its eurozone peers, however, with the EU statistics office Eurostat saying economic growth in the 19-nation currency bloc had risen 0.4% quarter-on-quarter in the first three months of 2019.
Istat gave no numerical breakdown of components with its preliminary estimate, but said industry, services and agriculture had all shown an increase in activity, with exports helping revive growth.
By contrast weak domestic demand had had a negative impact.
“The Italian economy came out of recession at the start of 2019 in better shape than expected. It is likely that the current quarter may be less dynamic, but the cycle’s minimum seems to be behind us,” said Paolo Mameli with Intesa Sanpaolo.
Data released last month showed that the fall in Italy’s fourth quarter GDP was primarily due to a sharp reduction in inventories, while exports, consumer spending and investments all expanded at the end of last year.
Earlier this month, the government of the anti-establishment 5-Star Movement and the right-wing League was forced to slash its forecast for full-year growth to 0.2% from a previous target of 1%.