According to preliminary data released this week, economic growth in Italy decelerated to 0.2% in Q2 from the first quarter, fuelled by domestic demand.

This followed on from an unrevised 0.3% rise in Q1

On a year-on-year basis, GDP for the eurozone's third-largest economy increased by 0.9% in the second quarter, according to the national statistics bureau ISTAT, which matches the findings of a Reuters survey.

“From the demand side, there is a positive contribution by the domestic component (gross of change in inventories) and a negative one by the net export component,” ISTAT commented.

The preliminary estimate didn’t provide a numerical breakdown of the components, but it noted that services contributed positively to the growth, while both industry and agriculture had a negative impact.

“We think that part of this weakness could be reversed, and that gradual GDP acceleration is likely in 3Q24, mainly thanks to strengthening of demand,” stated Loredana Federico, chief Italian economist at UniCredit.

Furthermore, the statistics bureau indicated that the quarterly increase was the fourth in a row, with the “acquired variation growth” reaching 0.7% at the end of Q2.

This implies that if quarterly GDP growth in Italy remained unchanged for the remainder of 2024, the total annual growth would still be 0.7%, Reuters reports.

In April, Italy's government projected a 1% expansion for the economy this year, which is roughly consistent with last year's growth rate of 0.9%.

Italian think tank Prometeia affirmed it was maintaining a “cautious optimism,” even though data were confirming “the critical elements of this economic phase.”

Moreover, according to data released on Tuesday, the eurozone's GDP increased by 0.3% quarter-on-quarter for the first quarter.

Year-on-year growth for Italy in Q1 was slightly revised down to 0.6% from the previously reported 0.7%.

ISTAT is set to announce the final Q2 GDP data on 2nd September.