Italy's economy contracts by 2%, unemployment rate edges up

GDP plunged in the first half of last year due to lockdowns across the country, rebounded by 16% in the third quarter, but again dropped in Q4

Italy’s economy shrank by 2 percent in the fourth quarter of last year from the previous three months, preliminary data showed, a slightly smaller slump than expected after a rebound in the third quarter. The country’s jobless rate rose to 9.0% in December with 101,000 jobs lost in the month.

On a year-on-year basis, fourth quarter gross domestic product (GDP) in the eurozone’s third largest economy was down 6.6%, national statistics bureau ISTAT said.

A Reuters survey of 24 analysts had forecast a 2.2% quarterly fall, down 6.7% from the year earlier.

The Italian economy plunged in the first half of last year due to government lockdowns to try to rein in the coronavirus.

It rebounded by 16% in the third quarter when restrictions were relaxed, before shrinking again at the end of the year as the epidemic gathered strength, forcing new curbs on businesses and freedom of movement.

ISTAT marginally revised its third-quarter data to show a 16.0% quarter-on-quarter rise and a 5.1% year-on-year fall, previously reported as 15.9% and -5.0%.

Over the whole year, GDP shrank by 8.8%, according to ISTAT’s preliminary estimate, not adjusted by the number of days worked.

That was the steepest annual GDP drop for Italy since World War II but it was a slightly smaller contraction than the -9% forecast by the Italian government.