Business morale fell to 99.2 in January, its lowest level since August 2016, down from 99.7 in December, according to data from statistics institute ISTAT. ISTAT’s composite business morale index combines surveys of the manufacturing, retail, construction and services sectors. At the same time, manufacturing confidence slipped to 102.1 in January, its worst reading since September 2016, down from 103.4 in December. However consumer confidence rose in January to 114.0 from 113.2 the month before.
Italy spent much of last year locked in a bitter war of words with European Union finance chiefs over Rome’s controversial budget plans.
The Italian government finally passed their monetary agreement at the end of December after the budget was repeatedly slammed by EU bosses.
Rome proposed a debt target of 2.4 percent of GDP but the EU would only allow 2.04 percent for 2019, falling to 1.8 percent next year and 1.5 percent in 2021.
The Italian economy contracted by 0.1 percent in the third quarter of last year.
If another slowdown is recorded for the final three months of 2018, Italy will officially be in its third recession since the global financial crisis more than a decade ago.
A recession is defined by economists as GDP falling for two consecutive quarters.
The Bank of Italy has forecast that fourth quarter gross domestic product data, to be released by ISTAT on Thursday, will show another decline.
The government of the anti-establishment 5-Star Movement and the right-wing League forecasts GDP growth of 1 percent this year, but most independent bodies expect it to come in at little more than half that rate.
Last month a Goldman Sachs report claimed Rome would “flirt with recession at the start of next year” if the dispute with the EU remained “unresolved”.
The paper, entitled ‘Landing the Plane’, goes on to accuse Rome of “casting a dark cloud” over Europe and labelled Italy as one of the key risk factors looming over the European market for 2019.
Meanwhile, in the Eurozone as a whole, economic confidence was today revealed to have fallen to its lowest score in more than two years.
Economic confidence dropped to 106.2 for January, a level not since since the end of 2016, from 107.4 recorded for December.