Italy's final Q2 GDP confirms stagnation - a major blow to PM Renzi ahead of autumn referendum

Italy's preliminary estimate of Q2 GDP was confirmed by statistics bureau ISTAT said on Friday at zero growth from the previous three months. On a year-on-year basis, second quarter growth was revised up slightly to 0.8 percent from the 0.7 percent estimate issued by ISTAT on August 12.

Data confirmed that Italy’s economic recovery ground to a halt in the second quarter, having eked out growth of 0.3 per cent in the first three months of the year. Economists had originally expected growth of 0.2 per cent in the second quarter.

Today's data is a major blow to the country’s prime minister, Matteo Renzi, as campaigning steps up ahead of a key referendum in the autumn on constitutional reform. Prime Minister Matteo Renzi said on Thursday he expected the flat reading would be revised up to show some modest growth, echoing previous comments from the economy ministry .

Renzi's government is aiming for full year growth of 1.2 percent in 2016, following a 0.8 percent GDP rise in the previous year when the country emerged from a three-year recession. However, following a recent spate of disappointing data, ministers called for projection to be revised lower.