The economy expanded at an unrevised 0.2 percent quarterly rate at the end of 2023, up from an unchanged 0.1 percent in the previous period. Annual growth was nudged a tick higher to 0.6 percent following 0.1 percent in the third quarter.

The headline quarterly gain masked a 1.4 percent drop in household spending and reflected instead a 2.4 percent jump in gross fixed capital formation within which there were particularly strong gains in housing (4.2 percent) and other buildings and structures (3.2 percent). Investment in machinery and equipment (0.5 percent) also made ground. Elsewhere, government consumption was up 0.7 percent.

Foreign trade also provided a boost as exports climbed 1.2 percent on the quarter while imports increased just 0.2 percent.

The revised fourth quarter data paint a mixed picture of the Italian economy. The weakness of household spending is clearly a concern and, with global trade sluggish, exports will probably provide less of a lift to growth in the current period. That said, the buoyancy of investment is good news for the medium-term outlook. The updated data lift the Italian RPI to minus 21 and the RPI-P to minus 10 but both measures show overall economic activity still lagging somewhat market expectations.

No revisions are expected leaving quarterly growth at 0.2 percent and the annual change at 0.5 percent.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. A flash estimate, providing just quarterly and annual growth rates together with some limited qualitative information on sector output, is usually available 6-7 weeks after the reference quarter.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.