The Italian economy unexpectedly contracted by 0.1% in the second quarter compared to the previous three months, preliminary data released on Wednesday revealed, potentially signalling the initial effects of rising US tariffs and growing global trade uncertainty.
On an annual basis, GDP in the eurozone's third-largest economy increased by 0.4% during the second quarter, as per the national statistics agency ISTAT, falling short of the 0.6% growth anticipated by economists polled by Reuters news agency.
A median forecast from 23 economists had predicted a 0.1% quarterly GDP increase for Italy.
According to ISTAT, the downturn was driven by negative trade flows, which outweighed the contribution of domestic demand during the quarter.
Chief Italy economist at Oxford Economics, Nicola Nobile suggested the decline may indicate “a normalisation of net exports after the strong figure in the first quarter.”
This was likely fuelled by companies accelerating shipments to the US in response to President Donald Trump's announcement of increased tariffs.
“The negative surprise stemmed from weakness in services activity, which stabilised against expectations of a slight recovery, and reflected the continued weakness in manufacturing,” according to Loredana Federico, chief Italian economist at UniCredit.
A detailed numerical breakdown of the GDP components is expected from ISTAT on 29th August.
Meanwhile, in April, Prime Minister Giorgia Meloni’s government revised its 2025 growth forecast downward, cutting it in half to 0.6% from the 1.2% target set the previous September due to growing uncertainty linked to shifts in US tariff policy and its potential impact on trade and economic performance.
The ISTAT data came as “a cold shower,” according to think tank Prometeia, which underscored that uncertainty surrounding trade is far from resolved.
In addition, Italian businesses will soon have to contend with “the effects of the new trade arrangements with the US and the Dollar depreciation.”
Preliminary data released on Wednesday indicated that the eurozone's economic growth in the last quarter was more resilient than expected, rising by 0.1% compared to the previous three months, defying forecasts that predicted no growth.