Italian Economy Contracts in Second Quarter

The Italian economy experienced a contraction in the second quarter of the year, falling short of expectations. Despite growth in services, weaker industrial activity contributed to a 0.3% decrease in gross domestic product (GDP) from April to June compared to the previous quarter. This decline follows a rebound in the first quarter after a contraction at the end of last year.

Economists had predicted flat growth for the second quarter, but the actual figures fell below these forecasts, according to a poll conducted by The Wall Street Journal. However, GDP did show a 0.6% growth compared to the same period last year, according to data from Italy's statistics office, Istat.

The decline in the economy was primarily driven by lower value in agriculture, forestry, and fishing sectors, as well as the industry. On the other hand, the services sector demonstrated growth. Domestic demand remained negative, while net exports remained flat.

The Italian economy, being the third largest in the eurozone, is projected to slow down to 1.3% growth this year, according to the Bank of Italy. The bank attributes this slowdown mainly to weakness in private investment, as stated in their latest forecasts.