Italy is facing a crisis but not all is lost yet, according to Bartali, De Rita and those who know about Italian industry
The Italian economy is on the rise again, though only by a fraction – and this fraction is progressively shrinking, 0.7% this year and an expected 0.5% in 2024. Unfortunately, then, we’re back to that flat and stagnant state that marked the last 20 years, trailing behind all main European countries after those erratic post-Covid times, when the country actually bounced back and even started recovering (8.3% in 2021 and 3.7% in 2022). Household consumption is down, stock lying in companies’ warehouses is dwindling and export is low, loans are few and far apart and industrial production is decreasing – it all paints a dreary picture for the future.
Data released on Saturday by the Centro Studi Confindustria research centre, as part of a report entitled “L’Italia torna alla bassa crescita?” (“Is Italy back to a slow growth?”) (Il Sole24Ore, 29 October) confirms trends already highlighted by the International Monetary Fund, the EU and the main international watchdogs. That question mark in the title, however, seems to suggest two things: concern that the economic situation might yet be further affected by current strains and uncertainties, but also hope that the slow growth might get a chance to pick up, perhaps through the implementation of more appropriate economic, fiscal and industrial policies that may reverse this negative trend.
Essentially, the future of our economy, our employment market and our earnings is not yet set in stone, a decline could be avoided and better times may yet be ahead, although, of course, only if…
Let’s look at the factors we already know: a general hyperglobalisation crisis that affected the transition from the 20th century to the new millennium, carrying with it intolerable disparities and inequalities; geo-political tensions swaying a multipolar world marked by conflicts between the United States and China and the devastating strength of new and powerful international players (such as India’s rapid growth); a dramatic outburst of armed conflicts, from the Russian invasion of the Ukraine to the war in the Middle East, which undermined already fragile international trade relations and disrupted assets in the Mediterranean region, with repercussions on both the security and energy fronts.
Europe, also thanks to its historical heritage – a unique blend of economic development and widespread wealth, social democracy and justice (Patrizio Banchi in la Repubblica, 11 September) – could yet play a key role in restoring balance and optimism, further aided by its shared monetary and fiscal policies, which proved a success in both political and cultural terms, but it’s currently struggling to voice an authoritative and unanimous approach.
To such an already negative climate, we can further add the inflation rate and the cost of money, a demographic imbalance and the impact of pressures generated by the technological and environmental transitions, whose social cost we are currently paying while we’re learning to handle their evolution so as to reap their benefits – sadly, however, the road is long and paved with misgivings.
We are basically living in a profoundly uncertain era and, day after day, unfolding events give rise to darkest thoughts – these are circumstances ill-suited to our growth and development needs for sure.
Moreover, Italy has to pay an additional price, which aggravates the situation: being an export country, the fall in international trade has brought its economy to a halt. The recession in Germany (Italy’s main industrial and commercial partner) is having an impact on several manufacturing sectors, starting with the automotive and mechatronics ones (“Germany’s hardships bear down on our GDP”, asserts Mario Deaglio, La Stampa, 13 September). Italy’s rising public debt doesn’t allow for the implementation of fiscal and public expenditure levers that could stimulate investment and recovery, as it’s happening in the United States and Germany. Up to now, political and public administration incompetence has prevented the creation of opportunities calling for the significant financial resources (237 billion in non-repayable loans and funds) made available by the PNRR, the Italian recovery and resilience plan (an intriguing description of current circumstances can be found in PNRR. La grande abbuffata – PNRR. A bingeing spree, a book by Tito Boeri and Roberto Perotti recently published by Feltrinelli).
So, is Italy’s bleak fate really and inexorably sealed? “Is it all wrong, should I start over?” as Gino Bartali used to joke? Not at all – indeed, the great champion who used to grumble and complain and yet triumphed in the Tour de France and the Giro d’Italia had to backpedal on his own words.
And furthermore, one of the sharpest commentators of the Italian economy and society, Giuseppe De Rita, president of Censis, offers a controversial viewpoint: “When talking about the real economy, nobody ever mentions those parts of the country that are malfunctioning – key parts of the economic systems that are left unattended” (Corriere della Sera, 25 October). Let’s go back to the 1970s. After the Yom Kippur War, when Israel defeated an extremely powerful alliance of Arab countries, energy prices went berserk, the Western economies underwent a terribly harsh period of reconstruction, inflation in Italy surpassed the double figures, public finances were in dire straits and, moreover, Italy was struggling through the “Years of lead”, a period of social unrest and terrorism. No one noticed it at the time, yet the Italian industry, little by little, was stealthily and “informally” restructuring itself over the territories, creating new competitive assets. We only realised this in the early 1980s, when an extraordinary amount of financial liquidity became available, looking for outlets and good investments, and Italy found itself wealthy and dynamic, thriving with innovative industrial districts as well as newly risen and brazen industrial, financial, fashion and advertisement moguls and tycoons.
And today? De Rita invites us to take a proper look within the hidden corners of Italian society and, despite figures pointing to a crisis, nonetheless give a voice and clear the way for those who are producing, innovating, growing and manufacturing: “Italian enterprises that are still in business are actually noticing some signs of life – feeble, yet there nonetheless: Italy’s driving engine – Milan and the Lombardy region – is still running well; the north-east is overcoming its economic dependency from Germany; the Emilia Romagna region and part of the Marche region abound with excellent assets; tourism in Tuscany, Umbria, Lazio (Rome), Apulia and Sicily has been booming.”
Basically, De Rita insists that “paying more attention to these more vigorous parts of the economy would boost morale, and as we’re about to face what is likely going to be a difficult winter, this is more important than speculations about public finances.”
Those familiar with the extremely complex – at times controversial and even contradictory – nature of Italian manufacturing can only agree with De Rita’s assessment. In fact, they recognise the successful reorganisation efforts of districts and production supply chains; the large and medium producers of green steel located between Cremona and Brescia; the enterprises who have embraced environmental and social sustainability as powerful and international competitive assets; the initiatives that are reviving the industrial north-west regions through fertile collaborations with entrepreneurial associations in Milan, Turin and Genoa; the industries that are revamping products and processes, making acquisitions and building partnerships abroad – such dynamism may not yet be fuelling the whole country or its economy, but can keep the crisis at bay and provide the foundations for the recovery. As Carlo Bonomi, president of entrepreneurial association Confindustria, concisely comments, “This is a complex scenery, but the industry remains strong. Italy can make it” (Il Sole24Ore, 5 October).
We just need some suitable Italian and European policies to strengthen such resilient social capital built on entrepreneurship and a desire for change – we just need a new and better culture rooted in responsibility.
(photo Getty Images)
The Italian economy is on the rise again, though only by a fraction – and this fraction is progressively shrinking, 0.7% this year and an expected 0.5% in 2024. Unfortunately, then, we’re back to that flat and stagnant state that marked the last 20 years, trailing behind all main European countries after those erratic post-Covid times, when the country actually bounced back and even started recovering (8.3% in 2021 and 3.7% in 2022). Household consumption is down, stock lying in companies’ warehouses is dwindling and export is low, loans are few and far apart and industrial production is decreasing – it all paints a dreary picture for the future.
Data released on Saturday by the Centro Studi Confindustria research centre, as part of a report entitled “L’Italia torna alla bassa crescita?” (“Is Italy back to a slow growth?”) (Il Sole24Ore, 29 October) confirms trends already highlighted by the International Monetary Fund, the EU and the main international watchdogs. That question mark in the title, however, seems to suggest two things: concern that the economic situation might yet be further affected by current strains and uncertainties, but also hope that the slow growth might get a chance to pick up, perhaps through the implementation of more appropriate economic, fiscal and industrial policies that may reverse this negative trend.
Essentially, the future of our economy, our employment market and our earnings is not yet set in stone, a decline could be avoided and better times may yet be ahead, although, of course, only if…
Let’s look at the factors we already know: a general hyperglobalisation crisis that affected the transition from the 20th century to the new millennium, carrying with it intolerable disparities and inequalities; geo-political tensions swaying a multipolar world marked by conflicts between the United States and China and the devastating strength of new and powerful international players (such as India’s rapid growth); a dramatic outburst of armed conflicts, from the Russian invasion of the Ukraine to the war in the Middle East, which undermined already fragile international trade relations and disrupted assets in the Mediterranean region, with repercussions on both the security and energy fronts.
Europe, also thanks to its historical heritage – a unique blend of economic development and widespread wealth, social democracy and justice (Patrizio Banchi in la Repubblica, 11 September) – could yet play a key role in restoring balance and optimism, further aided by its shared monetary and fiscal policies, which proved a success in both political and cultural terms, but it’s currently struggling to voice an authoritative and unanimous approach.
To such an already negative climate, we can further add the inflation rate and the cost of money, a demographic imbalance and the impact of pressures generated by the technological and environmental transitions, whose social cost we are currently paying while we’re learning to handle their evolution so as to reap their benefits – sadly, however, the road is long and paved with misgivings.
We are basically living in a profoundly uncertain era and, day after day, unfolding events give rise to darkest thoughts – these are circumstances ill-suited to our growth and development needs for sure.
Moreover, Italy has to pay an additional price, which aggravates the situation: being an export country, the fall in international trade has brought its economy to a halt. The recession in Germany (Italy’s main industrial and commercial partner) is having an impact on several manufacturing sectors, starting with the automotive and mechatronics ones (“Germany’s hardships bear down on our GDP”, asserts Mario Deaglio, La Stampa, 13 September). Italy’s rising public debt doesn’t allow for the implementation of fiscal and public expenditure levers that could stimulate investment and recovery, as it’s happening in the United States and Germany. Up to now, political and public administration incompetence has prevented the creation of opportunities calling for the significant financial resources (237 billion in non-repayable loans and funds) made available by the PNRR, the Italian recovery and resilience plan (an intriguing description of current circumstances can be found in PNRR. La grande abbuffata – PNRR. A bingeing spree, a book by Tito Boeri and Roberto Perotti recently published by Feltrinelli).
So, is Italy’s bleak fate really and inexorably sealed? “Is it all wrong, should I start over?” as Gino Bartali used to joke? Not at all – indeed, the great champion who used to grumble and complain and yet triumphed in the Tour de France and the Giro d’Italia had to backpedal on his own words.
And furthermore, one of the sharpest commentators of the Italian economy and society, Giuseppe De Rita, president of Censis, offers a controversial viewpoint: “When talking about the real economy, nobody ever mentions those parts of the country that are malfunctioning – key parts of the economic systems that are left unattended” (Corriere della Sera, 25 October). Let’s go back to the 1970s. After the Yom Kippur War, when Israel defeated an extremely powerful alliance of Arab countries, energy prices went berserk, the Western economies underwent a terribly harsh period of reconstruction, inflation in Italy surpassed the double figures, public finances were in dire straits and, moreover, Italy was struggling through the “Years of lead”, a period of social unrest and terrorism. No one noticed it at the time, yet the Italian industry, little by little, was stealthily and “informally” restructuring itself over the territories, creating new competitive assets. We only realised this in the early 1980s, when an extraordinary amount of financial liquidity became available, looking for outlets and good investments, and Italy found itself wealthy and dynamic, thriving with innovative industrial districts as well as newly risen and brazen industrial, financial, fashion and advertisement moguls and tycoons.
And today? De Rita invites us to take a proper look within the hidden corners of Italian society and, despite figures pointing to a crisis, nonetheless give a voice and clear the way for those who are producing, innovating, growing and manufacturing: “Italian enterprises that are still in business are actually noticing some signs of life – feeble, yet there nonetheless: Italy’s driving engine – Milan and the Lombardy region – is still running well; the north-east is overcoming its economic dependency from Germany; the Emilia Romagna region and part of the Marche region abound with excellent assets; tourism in Tuscany, Umbria, Lazio (Rome), Apulia and Sicily has been booming.”
Basically, De Rita insists that “paying more attention to these more vigorous parts of the economy would boost morale, and as we’re about to face what is likely going to be a difficult winter, this is more important than speculations about public finances.”
Those familiar with the extremely complex – at times controversial and even contradictory – nature of Italian manufacturing can only agree with De Rita’s assessment. In fact, they recognise the successful reorganisation efforts of districts and production supply chains; the large and medium producers of green steel located between Cremona and Brescia; the enterprises who have embraced environmental and social sustainability as powerful and international competitive assets; the initiatives that are reviving the industrial north-west regions through fertile collaborations with entrepreneurial associations in Milan, Turin and Genoa; the industries that are revamping products and processes, making acquisitions and building partnerships abroad – such dynamism may not yet be fuelling the whole country or its economy, but can keep the crisis at bay and provide the foundations for the recovery. As Carlo Bonomi, president of entrepreneurial association Confindustria, concisely comments, “This is a complex scenery, but the industry remains strong. Italy can make it” (Il Sole24Ore, 5 October).
We just need some suitable Italian and European policies to strengthen such resilient social capital built on entrepreneurship and a desire for change – we just need a new and better culture rooted in responsibility.
(photo Getty Images)