Italy set to come out of recession in Q1 2019: Bank of Italy

ROME (REUTERS): Italy’s economy grew by around 0.1% in the first three months of 2019, the Bank of Italy said on Thursday, suggesting that the country has pulled clear of the recession it slipped into in the second half of 2018. 

In its quarterly economic bulletin, the central bank said industrial production had increased month-on-month both in January and February. “Our estimates indicate that this growth continued in March,” it said.

The bank cited the latest survey of analysts polled by Consensus Economics which pointed to growth of between -0.1% and +0.2% for this year. In December, they had forecast 2019 GDP growth of 0.7% for Italy. 

Economy Minister Giovanni Tria said on Wednesday that the government’s downwardly revised forecast for economic growth of 0.2% this year reflected expectations of a slight recovery in the first half of 2019, followed by stronger growth. 

Gross domestic product (GDP) fell 0.1% in the third and fourth quarters of last year, putting the euro zone’s third largest economy into a technical recession. 

Turning to the state of Italy’s banks, the central bank said the ratio of non-performing loans (NPLs) to total outstanding loans continued to fall in the fourth quarter of last year for lenders under European Central Bank supervision. 

The ratio declined to 8.3% from 9.4% in the third quarter for gross NPLs. 

The central bank also said the first two months of this year had seen an increase in the amount of Italian government bonds held by foreign investors. 

As a result, Italy’s Target 2 liabilities declined to 475 billion euros ($533.85 billion) at the end of March, from 480 billion at the end of last year.