Italy's economy contracted 0.1 percent in the second quarter, and was 0.4 percent higher than the second quarter of last year, according to final figures. According to Italy's national statistics agency ISTAT, today's results translate into 0.5 percent annual growth for 2025.

Trade acted as a drag on the economy as a 0.4 percent gain in imports was outpaced by a 1.7 percent fall off in exports in the second quarter. Compared to year-ago levels, imports are up 2.5 percent and exports down 0.3 percent.

Among the other main components, gross fixed capital formation rose 1.0 percent in the second quarter from the first and was up 2.5 percent from the second quarter of last year. Final consumption expenditures were stable compared to the first three months of the year, and up 0.6 percent from last year's second quarter.

Italy's economy is moribund, and unlikely to see any meaningful expansion this year. The concern is that if inflation, relatively low currently, continues to pick up and put the economy into a phase of stagflation.

No revision expected from the flash with a 0.1 percent decline on quarter.

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.