“Our forecasts for the Italian GDP are in line with those of Brussels: +0,2% for 2019, with an increase in the second half, while in 2020 we currently assume a +0,7%”. Gregorio De Felice, chief economist of Intesa Sanpaolo, takes stock with FIRSTonline on the state of health of the Italian economy, in an international scenario in continuous evolution and full of political variables: protectionism, US-China trade relations, those between the US and the EU especially on the automotive market, Brexit, the European elections in May. “The scenario is complex: if I have to say too much today, I say that there are signs for a recovery of the Italian economy in the second half of the year, but it is not obvious. There is a large margin of uncertainty”.
Dr De Felice, what are the factors that would suggest a less negative 2019 for the Italian economy?
“In the meantime, we specify that the 0,2% we predict, in line with the estimates of the EU Commission, would in any case not be a great result but only a small trend reversal, considering that today we are at -0,1%. There are many variables, above all political, but for example I believe that the trade war between the US and China is being resolved, both have understood that they are losing out. Then with Trump everything can change with a single tweet, but today the indication is this. Furthermore, the recent moves of the central banks, the Fed and the ECB, have made it clear that the two institutes are taking note of the slowdown in the global economy and assuming a more patient attitude. Draghi announced a new TLTRO and above all blocked rates until 2020, adding that someone in the board would have liked to do so even until March 2021. Finally, a stimulus to consumption could arrive on the domestic front following some government reforms, such as that on citizenship income”.
However, the variables could come not only from external factors: do you think there is the possibility of a corrective maneuver?
“In my opinion, certainly not until the European elections, but not even after, at least not before the autumn. Meanwhile, in April we will see the new Def: let's remember that the deficit that interests Europe is the structural one, which also takes into account the slowdown in growth. At the moment, however, the markets seem relatively calm to me, I don't see the immediate need for a correction".
After the European elections, however, things could change.
"I will limit myself to saying that the sovereign movements are different from one another, from country to country, and I don't think they will unite to form a majority in the European Parliament".
Industrial districts and manufacturing SMEs have been strong points of the Italian economy in recent years: will they be able to minimize the effects of the change of cycle or will they be among the first to pay for the freezing of the economy?
“If the international cycle worsens, exports are still affected. Today the growth of world trade is lower than that of global GDP and this is not a good thing. However, districts, while slowing down, will continue to advance and be our strength: Italy, excluding energy goods, is the fifth country in the world and second in Europe behind Germany in terms of trade balance. Of the 90 billion surplus in 2018, no less than 79 billion were produced by our local or supply chain capitalism. An excellence that also allows us to be the first country in the world for the diversification of exported goods: if on the one hand it is true that we suffer from the too small size of our companies, on the other hand our industrial variety allows us greater flexibility and respond better to foreign demand. In phases of slowdown in trade such as the one we are experiencing, this makes it possible to offset the losses in some sectors by perhaps growing in others".
Among the sectors most in difficulty, not only in Italy, is the automobile sector.
“Cars had grown a lot in the past, then the new legislation on diesel engines forced manufacturers to adapt structurally and quickly, and this slowed down delivery times. Once this phase is over, the sector will be able to recover even if it will be awaited by the electric challenge".
Among many things, your Annual Report on districts shows the importance of foreign capital for Italian supply chains. It is therefore not true that the big multinationals come here to plunder us…
“First of all, internationalization is important, and our districts have understood this, pushing themselves in search of ever more distant markets: today compared to 2008, the distance of exports has increased on average by 367 km, with a considerable effort in particular to the furniture and building materials sectors, which have expanded their sales range by more than 700 km. And then yes, we have detected a fundamental role of Italian and foreign multinationals. Sometimes there have been cases of predatory companies, but the data confirms that the large foreign groups bring know-how and investments. I am thinking above all of the large French groups in the textile and fashion chain. Negative cases are an exception, to which perhaps more emphasis is given”.
What is most lacking in the Italian manufacturing fabric is investment and innovation. What do you think of the downsizing of the Industry 4.0 plan?
“That surely the possibility of making more investments in innovation helps, without forgetting the importance of training 4.0. In addition to the structural issue, there is in fact also that of a skills gap. The companies that we analyzed in the Report on the districts struggle to find skilled workers: in 78% of cases they do not find employees with skills related to 4.0 technologies and in 35% of cases they declare themselves companies 'with scarce digital skills'. However, I believe that the signs of easing on the macroeconomic front will also be important with regard to investments in innovation".
Can we therefore say that the strength of the Italian productive fabric is and must be that of uniting the tradition of Made in Italy with innovation and internationalization?
"Certain. If you introduce innovation to a traditional product, you improve it. The food becomes tastier, the garment more comfortable to wear, and so on. The recipe for success is basically very simple: to be competitive, a company must produce at low costs and be innovative”.
