For 2016 the German-Italian Chamber of Commerce expects a record in the German-Italian trade volume. The AHK Business Outlook shows that the business outlook of German companies is 6 points higher than the European average.
But indeed thinks need to be fixed: restructuring of the banking system, public debt needs to be tackled and the reform process continued.
8. 1. Machinery and equipment 2. Textile production and clothing
3. Chemicals and pharma 4. Metals and metal products
Top 4: German Exports to Italy (> 50%)
8
Source: AHK graphic; ISTAT
9. 1. Chemicals and pharma 2. Energy raw material
3. Electronic equipment 4. Metals and metal products
Top 4: Italian Exports to Germany (~ 50%)
9
Source: AHK graphic; ISTAT
10. 48
50
22
27
40
48
41
63
64
45
4
9
15
9
15
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Status of Business
Business outlook
Economic development
Employment
Imvestments
better/higher consistent worse/lower
Italy’s saldo of Business Outlook is 6 points higher than the European average
But: German companies more sceptical about the economic development
AHK Business Outlook 2016/17
10
Source: AHK Business Outlook 2016/2017
11. 1. Economic policy framework (65,2%) 2. Demand (45,7%)
3. Financing (26,1%) 4. Legal certainty (19,6%)
AHK Business Outlook 2016/17
11
Greatest risks in Italy for the economic development of German companies
Source: AHK Business Outlook 2016/2017
13. • 2nd most important industry nation
in Europe (~18%)
• 8th largest country in the world
• 4th largest country in Europe
• Doing Business 2017: Rank 50
• Backbone of Italy's economy:
hidden champions, manufacturing
industry, design & luxury
Facts about
Italy's Economy
13
15. -6
-4
-2
0
2
4
6
2008 2009 2010 2011 2012 2013 2014 2015 2016
Italy Germany EU-28
The impact on GDP due to the recession
Italys Economic Development
15
Source: Eurostat
16. Reform Monitor
16
• Budget consolidation: e.g. austerity
package, debt brake since 2014
• Reform of the social system:
retirement with 66/65 years
• Labor Market Reform: "Job Act“
• Judicial reform: e.g. new measures
on bankruptcy
• Simplification of public
administration: e.g. eGovernment
• Creation of GACS (Warranty
Securitization of performing loans)
• Fiscal incentives: Plan 4.0
18. Strengths
• Italian household have high wealth
and saving attitude (1st in Europe)
• Well capitalized (exception: MPS)
• Simple business models: focused
on Retail and SMEs (>4m)
Risks
• Low number of top worldwide
companies (9 in Fortune 500)
• Physical distribution:
30k branches, 300k employees
• Impact of 6years recession (2009-
2014): High stock of NPLs
The Italian
Banking market
18
Source: ABI, Covip, Borsa Italiana
19. The impact of 6 years of recession (2009-14): High stock of NPLs
The dead hand of bad debt
Italys NLP as Share of GDPNLPs by Region
Source: IMF, blackrock.com
19
20. Impaired Loans: EUR 360bn due to recession (GDP decrease of 10%)
The dead hand? How bad is the debt?
20
EUR 150bn
Past due &
Unlikely to pay
EUR 123bn
Loan Loss Provisions
(ca. 60%)
EUR 50bn
With additional real estate
collaterals worth EUR
85bn
EUR 37bn
With additional
personal guarantees
EUR 210bn
NLPs
on a gross basis
EUR 87bn
Net NLPs
+ +
Source: Bank of Italy, DB Research
22. Banking System Restructuring
• Significant number of banks
expected to be merged / bought in
the next 3 years
• No. of bank employees and
branches expected to be
significantly reduced in the next 5-
10 years
• Major restructuring costs
Digital and IT Investments
• Unicredit and Intesa already digital
leader in Europe (retail and SME)
• Leverage digital leadership in the
Mid Cap Corporate space
Future of the Italian
Banking system
22
Source: ABI, Covip, Borsa Italiana
24. Jörg Buck
CEO
German-Italian Chamber of
Commerce (AHK)
Via Gustavo Fara 26 - 20124 MILANO
Tel. +39 02 67913.202
buck@ahk-italien.it
www.ahk-italien.it
24
25. Italy - Economy and Politics
50 days after the Referendum
European Policy Dialogue