(Bloomberg) — Italy’s economy stagnated in the third quarter — just dodging a recession as Prime Minister Giorgia Meloni battles to keep output expanding while also limiting debt.
Gross domestic product was unchanged from the previous three months, data Tuesday showed. That follows a 0.4% contraction in the second quarter and is less than the 0.1% growth estimated by analysts in a Bloomberg poll.
The economy was helped by net exports, though domestic demand acted as a drag, national statistics institute Istat said in a statement.
The outcome puts Meloni in a difficult spot as she struggles to invest in the economy while also keeping Italy’s mammoth debt in check. It underscores how rising interest rates and weaker global exports are weighing on the euro zone’s No. 3 economy. The Bank of Italy sees 2023 GDP up by just 0.7%.
The news is part of a mixed picture across the continent. France saw slight growth in the third quarter, while Germany contracted by 0.1%. Figures for the 20-nation euro area, expected to show stagnation, are due later Tuesday.
Italy’s recent budget law, which envisages a wider deficit due to tax cuts and spending to help low-income families, has unnerved investors, pushing the spread between Italian and German 10-year bonds to 193 basis points.
–With assistance from Joel Rinneby and Giovanni Salzano.
