Italian exports too little for ailing economy

On Monday, Rome held the second round of its local elections to choose a new mayor. The most voted candidate was Ignazio Marino, who is member of the same centre-left coalition of current Italian prime minister Enrico Letta.

The markets weren’t surprised. Cortal Consors’ analysts said “these elections were seemingly a proof of how much support Letta holds.” His candidate won 63.8% of votes, and the Italian risk premium remained stable at around 270 basis points. But the macroeconomic figures published by the Italian Statistical office Istat were not good. Both 1Q13 GDP and exports data signal a drop, also recorded in April’s industrial production figures.

According to Istat, Italy’s GDP dropped by 0.6% in the 1Q13 compared to 4T12 when the economy lost some 0.9%, which implied a deterioration bigger than the 0.5% contraction expected by the experts’ consensus. After these results, the country accumulates seven consecutive quarters of recession.

Unlike Spain, where the external sector is propping up the economy, Italian exports have not yet taken off , falling by 1,9% in that same period–that is its worst register from 1Q09–, while cutting some 0,2% on an annual basis. At the same time, imports suffered its ninth quarter downturn with a fall of 1.6%, and a yearly drop of 5.2%

Pending April’s industrial production data for the Eurozone by next  June 12, figures in Germany, France, Spain and also Italy have now been published.  They were “neutral, regarding the expectations,” said Bankia analysts team. At Cortal Consors, experts agreed that numbers were “better than expected”, but highlighted that the Italian industrial production went down by 0.3% in April although initial estimations suggested it would remain unchanged. According to Link Securities, in 2013’s first four months, Italy’s industrial production decreased by 4.4% against records from last year.