Poor Italian IP data suggests possibility of another quarterly GDP contraction - ING

FXStreet (Łódź) - Paolo Pizzoli from ING comments on the Italian Industrial Production data for July released on Friday which showed a 1% contraction on a monthly basis and a 1.8% drop year-on-year.

Key quotes

"July production data provided the second piece of hard evidence (first came employment data) on 3Q14 economic activity."

"Both came in disappointingly low, casting fresh doubts about prospects for a return of GDP to positive growth already in the current quarter."

"True, in the past, the July-August production releases have often proved fairly volatile on the back of seasonal adjustment issues which failed to pick up the holiday break effect."

"This is why, for choice, we prefer not to emphasize Friday’s release too much."

"Still, also on the back of the deterioration in August business confidence indicators, we sense that risks to our current forecasts for a flat third quarter are now clearly tilted to the downside."

"We currently forecast a 0.2% average GDP contraction in 2014 for the Italian economy."