Germany and Italy are divided by the furrow of the "spread" between government bonds. It is a gap that is monitored daily and that the action of speculation makes it extremely wide. Seen through the lens of the spread, Germany and Italy appear as two profoundly different and distant subjects. There virtue, stability. Here the problems, the risks. This is not the case, but correcting the speculative syndrome that penalizes Italy's position requires us to continue proceeding on the double track of rigorous accounting and relaunching growth. Despite the trend of the spread on government bonds, the growth front is the one that today sees Germany and Italy much closer than one might otherwise think. Both countries are facing the same problem: the dangerous weakening of the push of exports towards the euro area.
The signals that come from the European trade situation are clear. Last October, the annual growth rate of German exports to the euro area fell below zero. Italian imports from Germany have fallen, year on year, by more than six percentage points. At the same date, the year-on-year growth of Italian exports to the Eurozone was reduced to just over one percent. In the previous months of 2011, the progression of foreign sales intended for the basin of the single currency was located in both countries at a much higher pace, such as to place the overall expansion in the period between January and October in the order of ten percentage points . Both in Germany and in Italy, exports are supported today only by extra-EU sales. The implosion of intra-eurozone trade weighs, and will weigh, since the area accounts for 40 percent of German exports and 43 percent of Italian ones.
Everyone knows that Germany is the first buyer of Italian exports. Germany matters to Italy, but Italy also matters a lot to the German economy. Our country is the fifth world buyer of "made in Germany" products. In 2010, Italians bought German goods for a good 58 billion euros, 6,1% of Berlin's exports. Even in 2010, the Italian market was worth more to the German exporter than the one represented by China, albeit on the rise. Added together, German exports to France, Italy and Spain are worth more than three times the sales of "made in Germany" products on the Chinese market. Non-European markets are growing at great speed, but the center of gravity of exports and, therefore, of Germany's great economic engine remains firmly rooted in "core Europe", for better or for worse.
The sharp decline in trade flows within the eurozone is no less a serious problem for Germany than it is for Italy. German exports to Europe are by no means a small part of Italian imports from Germany, and vice versa. If Italy does not grow or, worse, goes into recession, the problem is for the Italians, but also for the Germans. The same is true considering the effects of depression on German exports originating from the slowdown also marked by the French economy. The vicious circle of the drop in intra-European trade is a tangible demonstration of how the recovery of growth in the single currency area must be pursued on a national basis, but also imposes strategies at the European level and solutions to be sought in the bilateral relationship between the different business partners.
The ten years of the euro's life have seen the consolidation of a situation of imbalance in the trade balances and, more generally, in the foreign accounts of the main member countries. Germany's large current account surplus is now roughly equal to the sum of the individual deficits recorded by France, Italy and Spain. The correction of the external imbalance between Germany and its main trading partners of the Eurozone must not be left to itself and, therefore, to the mere and painful contraction of the demand for imports of the deficit countries which are today those at greatest risk of recession. If that were the case, everyone would suffer. As far as we are concerned, the snitch of the recovery is in the hands of the recovery of competitiveness that Italian productions and the country system will be able to put in place, through a formidable effort of innovation and cohesion. The snitch of the recovery is also in the hands of the German consumer and the German authorities, who have many resources and just as many reasons to invest in the future of common European growth.
