ROME (Reuters) -The Italian economy unexpectedly shrank by 0.1% in the second quarter compared to the first, preliminary data showed on Wednesday, possibly reflecting the early impact of a rise in U.S
Italy's Economy Unexpectedly Contracts in Q2 Amid Trade Challenges
ROME (Reuters) -The Italian economy unexpectedly shrank by 0.1% in the second quarter compared to the first, preliminary data showed on Wednesday, possibly reflecting the early impact of a rise in U.S. tariffs and global trade uncertainty.
Gross domestic product in the euro zone's third-largest economy grew 0.4% in the second quarter on the year, national statistics bureau ISTAT said, missing expectations of economists surveyed by Reuters for growth of 0.6%.
The 23 economists had expected 0.1% growth from the previous quarter in a median forecast.
The quarterly GDP decrease between April and June was due to negative trade flows that offset domestic demand, ISTAT said.
Nicola Nobile, chief economist for Italy at Oxford Economics, said the data could reflect "a normalisation of net exports after the strong figure in the first quarter", when companies rushed to export goods to the U.S. after President Donald Trump's announcement of higher 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," said Loredana Federico, chief Italian economist at UniCredit.
A numerical breakdown of components that ISTAT is due to release on August 29.
Prime Minister Giorgia Meloni's government in April halved its 2025 growth forecast to 0.6% from a 1.2% target set in September, amid mounting uncertainty due to changes in U.S. tariff policy.
The ISTAT data were "a cold shower", think tank Prometeia said, underlining that trade-related uncertainty is not yet over and after that Italy's firms will have to face "the effects of the new trade arrangements with the U.S. and the dollar depreciation".
Preliminary data on Wednesday showed that euro zone economic growth held up better than feared last quarter, expanding by 0.1% from the previous three months against expectations for an unchanged reading.
(Reporting by Antonella Cinelli, graphic by Stefano Bernabei, editing by Cristina Carlevaro, Bernadette Baum and Ros Russell)
