Italy’s economy showed a slight improvement in the third quarter of 2023, with the final GDP growth rate revised to +0.1% quarter-on-quarter, up from the preliminary estimate of +0.0%. This marks a recovery from the previous quarter’s contraction of -0.1%. Year-on-year, the GDP growth also exceeded expectations, coming in at +0.6%, compared to the anticipated +0.4% and a prior figure of +0.4%.

The growth in the third quarter was primarily driven by domestic demand, which contributed 0.2 percentage points to the overall GDP increase. Notably, household consumption and spending by non-profit institutions each added 0.1 percentage points, while gross fixed investments also contributed positively. However, public administration spending remained neutral, contributing no growth.

On the external front, net foreign demand provided a boost to the economy, adding 0.5 percentage points to GDP growth. Conversely, the change in inventories and valuables negatively impacted the overall growth, subtracting 0.6 percentage points.

Sector-wise, agriculture and services sectors recorded positive growth, with agriculture expanding by 0.8% and services by 0.2%. In contrast, the industrial sector faced challenges, contracting by 0.3% during the same period.

Despite this modest growth, analysts suggest that the European Central Bank (ECB) is unlikely to alter its monetary policy stance. The ECB has consistently emphasized its focus on controlling inflation, indicating that the current interest rate settings are deemed appropriate for the economic climate. As such, while the latest GDP figures reflect a positive trend, they may not significantly influence the ECB’s future decisions regarding interest rates.