Italy's GDP returns to growth in Q3 after flat Q2

Italy’s economy expanding more than expected in the third quarter. Preliminary report released by statistics agency Istat on Tuesday showed that Italy's gross domestic product (GDP) rose 0.3 percent in the three months through September after stalling in the previous quarter. The rise was more than economists' expectations for a 0.2 percent rise.

On a yearly basis, GDP growth accelerated to 0.9 percent from 0.7 percent in the second quarter. The annual growth was expected to remain stable at 0.7 percent. The GDP growth is the result of “an increase in the added value of the industry sector and services, and of a decline of agriculture,” the statistics institute said in the report.

Rise in GDP was a boost to Prime Minister Matteo Renzi ahead of next month’s referendum that might decide his political future. Renzi’s government committed to reduce the public debt ratio starting this year, before acknowledging in September that the goal was out of reach. Renzi's govt pushed target for 2017, when it aims at cutting the debt-to-GDP to 132.5 percent from 132.8 percent this year.

Istat had signaled earlier this month that the pick-up in the economy may be short-lived as Istat’s leading indicator does not signal “a further acceleration of the economic activity” in the fourth quarter. A slowdown in economic growth might hinder Italy’s efforts to contain its public debt.

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