.According to the Italian Statistic Office ISTAT, in the third quarter of 2010 GDP grew 0.2% on the previous quarter and 1% year-on-year, due mainly to an increase in the added value of industry and services. Several sectors have contributed to this output growth: mainly service sectors such as hotels, transport and information [+1.5%], but also manufacturing and construction [+ 0.9%], and those providing financial services [+ 0.3%] and utilities [+ 0.3%]. However, added value in the agriculture sector declined [- 0.7%]. In Q3, industrial turnover and new orders rose 2.0% and 2.1% respectively on the previous quarter, and business confidence increased slightly in October: to 99.8, the highest figure since June 2008.
After falling in the first eight months of 2010, consumer confidence improved again in September and October. In Q3, the ISTAT retail trade index increased 0.3% on the previous quarter and, according to Confcommercio, the association of wholesalers and retailers of goods, average family spending during this Christmas period has been quite satisfactory, although in real terms [net of inflation] its value will drop by 1.2%: from 1,354 last year to 1,337. In particular, Italian consumers have spend their money on food and on electronic/ICT goods such as PCs, Ipads and LCD TVs, while the purchase of traditional goods such as textiles and footwear has decrease. The electronics/ICT sector has already profited from the switch from analogue to digital TV broadcasting which has pressured consumers to either change their TVs or buy decoders.
Insolvencies will decrease in 2010
According to the Italian Chamber of Commerce, corporate insolvencies increased 13.8% year-on-year in Q3 of 2010 [to 2568 cases]. In terms of sectors, the insolvencies are well spread across all industries with more or less the same trend. The only peculiarity is in the wholesaler sector, in which, after a decrease in the number of insolvencies in 2009, insolvencies have risen again in 2010. From January to September there was a 23% year-on-year rise in insolvencies, indicating that the peak has now past.
In October 2010, the Expected Default Frequency [EDF] indicator for listed companies in Italy dropped again compared to the previous month, to 88 basis points, and ending 110 points lower than at its peak in February 2009. The Italian EDF has reached its lowest level in more than two years.
Since GDP has been growing in the last three quarters, Italy seems to be on the path of modest recovery, even though the trend has decreased in the last quarter. For 2010 the government estimates a 1% growth with an increase in consumption of 0.4% and an inflation rate of 1.6%. For 2011, both the Economist Intelligence Unit and the International Monetary Fund expect output to remain low: at 1%. Expectations are that GDP and consumption will not return the 2007 levels until the end of 2015.
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