Prelim Q4 GDP declines after seven quarters of expansion
Weak domestic demand behind GDP contraction
Full year 2022 growth comes in at preliminary 3.9

ROME, Jan 31 Reuters Italy39;s economy shrank by 0.1 in the fourth quarter of last year from the previous three months, preliminary data showed on Tuesday, a slightly smaller contraction than expected but still raising fears of recession.

On a yearonyear basis, fourth quarter gross domestic product in the euro zone39;s third largest economy was up 1.7, national statistics bureau ISTAT said.

A Reuters survey of 23 analysts had forecast a 0.2 quarterly decline and a 1.6 rise compared with the year earlier.

While Italian output slipped slightly at the end of 2022, GDP across the whole euro zone expanded by 0.1 in the fourth quarter, Eurostat said, lifted by expansion in Spain and France.

Over the whole of last year, Italian GDP growth, adjusted for the number of working days, came in at 3.9.

Looking ahead, the outlook has been clouded by skyhigh inflation and energy costs, exacerbated by the war in Ukraine, which have sapped business and consumer confidence, crimped investments and hit families39; spending power.

Italian bank Unicredit, which had forecast Italian GDP to contract by 0.1 this year, said after Tuesday39;s data that it was likely to upgrade its outlook to one of modest growth.

The stock of excess savings accumulated during the COVID19 pandemic still amounts to a sizeable 8 of nominal GDP, thus…