Italy Market Opportunities
MFA: Strategic opportunities for foreign exporters
Italy is one of the countries in Europe that has felt the consequences of the pandemic the most. However, despite the dramatic effects in the social and economic spheres, the country continues to maintain its privileged position as an industrial and innovative power, and despite the decline in 2020, it is still ranked seventh in the volume of industrial production in the world (ahead of France and Great Britain). However, industrial production fell by 11.4% in Italy in 2020 due to the pandemic, the second worst result since monitoring began in 1990 (after the 2009 crisis).
The government has adopted a long series of measures to reduce the social impact of the pandemic and to preserve industrial capacities. The effectiveness of the steps was also reflected in the rating agency Moody’s, which confirmed the credit reliability of Italy at the Baa3 level with a stable outlook. According to the parliamentary budget committee, Italy’s GDP will grow by 4.3% in 2021 and by 2.7% in 2022. Growth will be stimulated mainly by the EU Recovery Fund. According to the statistical office ISTAT, Italy’s GDP fell by 8.8% in 2020.
6 packages of measures were issued in the form of legal decrees. So far, the latest “Sostegni” contains funds in the amount of EUR 32 billion, which represents 1.9% of Italy’s GDP, and another package in the amount of EUR 20-30 billion is being prepared. Previous packages during 2020 were worth over €100 billion, which is 5.6% of the previous year’s GDP. Thanks to the government’s financial programs, it was possible to preserve production capacity and liquidity, when the government guaranteed loans to companies worth EUR 700 billion.
The pandemic in Italy has contributed to the visibility of some budget-neglected sectors, where funding is now being increased. Current priorities include science and research, where €23 billion will go from the government packages, education will receive €billion from the state budget, over €9 billion will go to healthcare, the “Transition 4.0” program to increase the competitiveness of Italian industry is refinanced in the amount of EUR 370 million.
The secondary effects of the economic crisis will be reflected in the restructuring of production, in the attempt to limit global supply chains, in changes to labor legislation and the expansion of work from home, as well as in the acceleration of digitization, which are simultaneously factors that can contribute to a greater modernization of Italy. The government is also considering the return of production in some strategic sectors back to Italy.
Of all EU members, Italy is to receive the largest share of the EU Recovery Fund, amounting to EUR 19billion. For the possibility of drawing the allocated funds, the Italian government is preparing a National Recovery Plan, the management and coordination of which was entrusted to the Ministry of Finance. It is divided into six investment areas: digitization, innovation, competitiveness and culture, green revolution and ecological transition, infrastructure for sustainable mobility, education and research, social inclusion, health.
According to the budget law for 2021, the Italian government has confirmed support for the automotive industry, which it considers to be a priority, both from the point of view of exports and investment attractiveness. As a result of the pandemic, there was a production cut in Italy of up to 900,000 cars. The Italian government directs resources mainly to green investments, support of innovative technologies and confirms the will to work on a more extensive implementation of the production of electric cars in Italy. This is evidenced by the Chinese investment of the Faw company in the Emilia Romagna region in the amount of EUR 1 billion for the production of electric cars.
According to allcountrylist, the car company Stellantis (a merger of Fiat, Chrysler, PSA), which is today the fourth largest car manufacturer, is also moving towards electromobility. In Italy, the share of hybrid and electric cars increased significantly in 2020 compared to 2019. Of the total number of 127 thousand cars (share of 6.6% of the total number of cars) increased to 281 thousand cars (20.3%), which is almost triple. Given the planned investments in infrastructure, even the hitherto stagnant sector of bus production may grow.
Civil aviation industry
Italian demand in this sector coincides with the Czech Republic’s supply. Specific opportunities for Czech companies are offered especially in the area of light propeller aircraft or components in the area of the space industry. In the cases of both sectors, cooperation is already underway and cooperation within the European Union projects is growing.
Transport industry and infrastructure
Due to the ongoing problems in the Italian infrastructure (the collapse of the Morandi bridge in Genoa and other bridges) and following the start of the Italian economy after the end of the pandemic, Italy will continue with large infrastructure works. According to the National Recovery Programme, the government intends to speed up and simplify administrative procedures and tendering to build as soon as possible.
EUR 32 billion will be available for infrastructure, which will be used for the construction of a high-speed rail link, the implementation of the Italian Ports Plan, the digitization of airports and logistics systems, the safety and digital monitoring of roads, viaducts and bridges. An amount of EUR 28.3 billion is reserved for the main communication link, EUR 3.68 billion for intermodal freight transport and integrated logistics.
Italian railways, in addition to continuously changing the rolling stock, are focusing on strengthening the rail connection between the Apennine Peninsula and other parts of Europe, both in passenger and freight transport. The construction and expansion of new corridors between Italian ports and countries north of the Alps aim to increase the volume of transported goods and shorten transport distances between Asian ports and European destinations. In the case of passenger transport, the construction of a high-speed railway connection between Turin in northern Italy and Lyon in France will be implemented, the completion of which is estimated for 2032.
As the intermodal way of transporting goods (a combination of road and rail transport) has proven itself during the quarantine, GTS Rail, a private rail freight company, continues to invest in the purchase of locomotives and wagons.
Czech suppliers are offered a wide range of opportunities in the sector, from design work to subcontracting of materials or services.
Increasing the share of energy from renewable sources is one of the priorities of the Italian government, and the energy transition is one of the pillars of the Economic Recovery Plan. The goal is to increase renewable sources by 30%, i.e. to 55% of consumption in the following years. Today, green energy employs more than 3 million people in Italy (another 500,000 jobs are being created at the same time), and opportunities are thus created within the entire production and supply chain. There will be construction of new infrastructure, digitization of distribution networks, development of electromobility or investments in the development of hydrogen technologies.
The significant position of the Czech holding EPH, which owns power plants in several regions in Italy (6 gas, 3 thermal biomass and 1 coal) testifies to the possibilities of application on the Italian market. Italy is also planning to build a national repository for radioactive waste. The cost of the project is estimated at EUR 900 million. The construction of the national repository and the associated technology park requires public tenders and tenders and also presents a number of opportunities for companies dealing with radioactive waste management.
The government has allocated more than 40 billion (20% of total resources) for the country’s digital transition and the development of 5G networks, broadband and modernization of the state administration under the National Recovery Plan. Digitization of the economy is also a priority of the Italian presidency of the G20 group. Specific objectives: digitization of industry with a particular focus on SMEs and emerging technologies such as artificial intelligence and blockchain, increasing the free flow of data, improving connectivity and social inclusion, supporting the development of smart cities.
Italy is one of the major players in the field of the European defense industry and a strong supporter of the trend towards the consolidation of the European armaments policy. It actively supports international defense-industrial cooperation, especially in high-tech sectors, but also in the field of aviation, control and command systems, communication and electronic systems and software or avionics.
In the wake of the Green Revolution, Italy is considering a wider connection between the agricultural and space industries. Satellites could help increase the efficiency and quality of agricultural production and help reduce resource consumption and protect the environment.
Italy is one of the leading countries to implement robots in production processes and ranks 6th in the world. Robotics maintains a high level of demand even during the pandemic, and higher involvement is expected in, for example, medical facilities, use in disinfection and sterilization of premises and in areas with a high prevalence of the virus. Higher investments are expected in telemedicine, infection monitoring and monitoring of high-risk patients.
Water management and waste industry
As a result of outdated water infrastructure, 47.6% of drinking water is lost in Italy. The sector suffers from a lack of investment, it is in one of the last places in Europe behind Romania and Malta with an amount of 40 Euros per person per year compared to the European average of 100 Euros. 60% of Italian water networks have been in operation for more than 30 years, and 25% even 50 years.
The Italian government intends to set aside around €15 billion under the National Recovery Program to invest in the repair of water infrastructure through an investment plan for efficiency and the implementation of an integrated water system, which includes the modernization of the drinking water distribution network, the reduction of anthropogenic pressure on water ecosystems with the aim mitigation of climate impacts, construction of new and modern treatment plants, radical and thorough intervention in sewage networks.
Healthcare and pharmaceutical industry
The Italian pharmaceutical industry (also thanks to the presence of multinational corporations) belongs to the European top. Although the export of antibiotics to Italy has almost doubled since the Czech Republic joined the EU, it has not yet reached the level of the late 1990s. The development of vaccines and drugs appears to be a significant opportunity in connection with the pandemic. The Italian government has allocated EUR 9 billion to support the health sector. Opportunities can be in increasing the capacity of hospitals, converting factories for the production of vaccines or research.
An interesting item from the point of view of a positive market trend is food and vitamin supplements, the demand for which is constantly increasing on the Italian market. Italy is the main European market with a share of 27%. The average consumption of vitamins and food supplements increased by 126% in the period 2009-2019, approximately 32 million Italians consume vitamin supplements, of which 17 million people included them in their daily regimen.