The Italian economy experienced modest growth in the second quarter, with the seasonally and calendar-adjusted GDP increasing by 0.2 percent from the previous quarter and 0.9 percent year-over-year. Although this suggests a degree of economic resilience, the specifics disclose a varied performance across a variety of sectors.

Month-over-month, gross fixed capital formation increased by 0.3 percent, suggesting some investment activity, while final consumption expenditure remained constant, suggesting cautious consumer behaviour. Nevertheless, the dynamics of international commerce were weakened, as both imports and exports experienced a 0.6 percent and 1.5 percent decline, respectively.

Year-over-year, a more dynamic transition is observed as gross fixed capital formation demonstrated a robust 4 percent increase, emphasising stronger business investment. Despite this, consumer expenditure experienced a minor decrease of 0.1 percent, while imports experienced a substantial decline of 5.3 percent. These declines were a result of subdued domestic demand and global trade challenges. Exports experienced a slight 0.5 percent increase, which indicates that there has been some improvement in foreign demand.

While the annual GDP growth for 2024 is positive, it is still fragile due to fluctuating consumption patterns and trade uncertainties, as evidenced by the carry-over annual GDP of 0.6 percent. In general, the economy is attempting to balance modest growth with potential headwinds, navigating a complex landscape of conflicting signals, leading to a positive RPI of 6 and also RPI-P of 6.

No revision is expected to the flash estimate.

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.