March 4 (Reuters) - Italy’s economy contracted sharply in the fourth quarter of last year due to falling domestic consumption and a steep decline in inventories, national statistics bureau ISTAT said on Wednesday, confirming a preliminary estimate of a 0.3% drop in gross domestic product.
The GDP fall between October and December was the steepest contraction since the first quarter of 2013 and came before an outbreak of coronavirus hit the country last month.
On a year-on-year basis, fourth quarter GDP was revised up marginally to show a 0.1% percent rise, compared with the 0.0% printout in ISTAT’s flash estimate on Jan. 31.
Third quarter data was confirmed at 0.1% quarter-on-quarter and 0.5% year-on-year.
Over the whole of 2019, the euro zone’s third largest economy grew 0.3%, the slowest rate since 2014, ISTAT said, confirming data issued on Monday.
The breakdown of components in the fourth quarter showed a steep draw-down of inventories was the main culprit for the GDP decline, while consumer and government spending also declined.
These components offset a strongly positive contribution from trade flows.
Consumer spending fell 0.2% quarter-on-quarter, government spending declined 0.1% and investments also shed 0.1%. Imports fell a steep 1.7% from the previous quarter, while exports rose 0.3%.
Looking ahead, the most recent official forecast of the government of the anti-establishment 5-Star Movement and the right-wing League sees 2020 growth of 0.6% percent.
However, in the wake of the coronavirus outbreak which has heavily disrupted activity in the most productive northern areas of the country, most economists now expect a full-year decline.
So-called “acquired growth” at the end of last year stood at (-0.2%), ISTAT said, meaning if GDP were to be flat quarter-on-quarter in each quarter of 2020, there would be a full year contraction of 0.2%.
ISTAT gave the following details on contributions to quarterly growth in the fourth and third quarters of last year.