Markets yawn as Italy enters technical recession
Italy fell into a technical recession in 2018, with quarter-over-quarter growth declining in both the third and fourth quarters of the year, national statistics bureau ISTAT reported on Thursday.
Of note: The country's GDP fell 0.2% in the fourth quarter, following a 0.1% decline in the third. However, Italian GDP rose 0.1% on an annual basis in Q4 and 0.7% in Q3. (The definition of recession is quite nuanced and hotly debated.)
Recession of any kind is generally worrisome, but markets were little moved by the news because Italy's stalled growth has been known for some time.
- The spread between Italian 10-year bond yields and similarly dated German bonds remained near 240 basis points, and the country’s benchmark FTSE MIB closed just 0.21% lower on the day.
What they're saying: Italian Prime Minister Giuseppe Conte was also undisturbed by the (technical) recession announcement.
- "I'm not at all worried ... Even the most naive analysts know that at this moment there is a trade war going on between the United States and China," he told reporters.
- "Above all, Germany is holding us back ... it's a transitional phase, which depends on external factors."
- "We are interested in focusing on the relaunch of our economy, which will certainly take place in 2019 ... This relaunch will hit full capacity in the second half."
More bad news for the EU: German retail sales fell by 4.3% in December, the biggest monthly drop in 11 years.