Italy, Spain see economic growth falter to multi-year lows

Chris Williamson, the firm’s chief business economist, cautioned about developments in Italy and Spain, with the former “on course for its weakest expansion for nearly two years.” For Spain, he said, growth could be even the “worst for almost five years.”

Spain has been growing strongly for years, so a slowdown had been anticipated. In the second quarter of the year, it grew at a still-healthy annual rate of 2.7 per cent.

Italy, on the other hand, has not seen growth as strong as Spain’s for years and in the second quarter of 2018 expanded at an annual rate of just 1.1 per cent. Tepid growth has been one of the main reasons why Italians voted in such large numbers for more populist parties in this year’s election.

The worry in financial markets is that Italy’s new coalition government could ramp up its anti-euro rhetoric if growth stumbles further, especially after the European Central Bank end its bond-buying stimulus program this year, as it has signalled it will do.

Daniel Harenberg, a senior economist at Oxford Economics, said Wednesday’s survey highlights again that the business cycles in the eurozone are “not perfectly in sync,” with Italy potentially more affected by a slowdown in export orders in Germany.

“This bears the potential to heighten political tensions between the Italian government and European institutions once the ECB stops its quantitative easing towards the end of the year,” he said.

Pan Pylas, The Associated Press

by Canadian Press

Italy, Spain see economic growth falter to multi-year lows

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