italys economy contracted marginally in 2022s fourth quarter underscoring the toll that high energy prices took on activity at yearend despite a resilient performance throughout 2022 italys gross domestic product declined 01 from october to december compared with the previous quarter swinging from a 05 expansion in the previous threemonth period data from italys statistics office istat showed tuesday that was the first decline in output since 2020s fourth quarter however the reading is above economists expectations who forecast the italian economy to shrink 02 in the fourth quarter lower domestic demand was the main driver of the contraction while foreign trade contributed positively to growth istat said italys gross domestic product expanded by 39 in 2022 as a whole it said italys economy is expected to contract again in the first quarter of 2023 according to a consensus forecast from factset this would confirm a recession in the eurozones thirdlargest economy as consumers continue to feel the pinch from stillhigh energy bills and rising interest rates still the downturn is forecast to be milder than what was expected some months ago as the risks of energy rationing have diminished and energy prices have moderated the bank of italy expects the countrys economy to expand 06 in 2023 according to its latest economic bulletin