Project Report 2009 Innovasjon Norge Italia Foto: Giacomo Foti/Nikon Vi gir lokale ideer globale muligheter PROJECT REPORT ITALY JANUARY-DECEMBER 2009 Index 1) General data a) Economic highlights b) Market information/Tourism development Italy 2) Tourism to Norway a) Bed nights development 2008 b) Bed nignts development 2009 3) Project reports a) Press b) Bransjebearbeidelse c) NTW d) Scandinavian WS in Rimini 15.10.09 e) Distribution f) Public & Trade fairs: BIT, BMT, TTG g) Visitnorway.it h) Shortbreak i) Co-marketing with Sant’Anna j) Co-marketing with NSEC k) Reputation Building 4) Annex: research Facebook INNOVASJON NORGE - Via Puccini 5 - 20121 Milano Tel. +39 02 85 45 14 17 - E-mail: [email protected] 1) General Data Italy a) Economic highlights Italy is the 9th largest economy in the world measured by GDP, and of significant importance to Norwegian business and industry, beeing the eight most important trading partners for Norway. Italy is also a source for knowledge, technology and innovation in a number of IN priority sectors, such as clusters, agriculture and tourism, and also a target market for SME’s. The population is 60 millions, and the country is divided into three main economic areas: the very rich and dynamic North, the well developed Central parts and the underdeveloped South. Italy is one of the most important markets for the Norwegian export of fish, especially stockfish and salted and dried cod. Other important markets are Energy, Maritime and Information Technology. Facts about Italy Republic since 1946 Surface area: 301 340 km2 Population: 60 090 430 (Eurostat 2009) Joined the European Union: Founding member (25 March 1957). Highest population density in Europe: 199 inh./km2 Administrative organization: 20 regions, 110 provinces, 8110 municipalities Main cities: Rome 2.6 mill. Milan 1.3 mill. Naples 984’ Urban areas: Milan 7.4 mill. Rome 3.7 mill. Naples 3.1 mill. Italy at a glance Member of G8 7th biggest GDP in the world: 1.572 billion € (2008) (Istat) 4th largest economy in the Euro zone after Germany, France and UK (IMF) Italy is a founding member of the European Union and one of the first-wave countries to adopt the euro on 1 January 1999. The EU economy is showing clear signs of recovery and looks to return to grow in the second half of 2009. However, with the strong downturn at the end of 2008 and start of the year, the forecast for 2009 as a whole remains unchanged: GDP is expected to fall by 4% in both the EU and the Euro zone. The Commission's interim forecast is based on updated projections for France, Germany, Italy, the Netherlands, Poland, Spain and the UK – together accounting for some 80% of the EU’s GDP. The Commission sees signs of an imminent economic recovery and fears of a prolonged and deep recession are fading. GDP growth is set to turn positive in the second half of the year. However, the forecast for 2009 as a whole remains unchanged as the previous estimates for 2008 and the first quarter of 2009 proved weaker. GDP is expected to fall by 4% in both the EU and the Euro area this year. 2 Quarterly GDP forecast Annual GDP forecast (%, quarter-on-quarter) (%, year-on-year) 2009 2009 Spring forecast Interim forecast 2009/1 2009/2 2009/3 2009/4 May 2009 Sep. 2009 Germany -3.5 0.3 0.7 0.1 -5.4 -5.1 Spain -1.6 -1.1 -0.4 -0.2 -3.2 -3.7 France -1.3 0.3 0.4 0.3 -3.0 -2.1 Italy -2.7 -0.5 0.2 0.1 -4.4 -5.0 Netherlands -2.7 -0.9 -0.4 0.0 -3.5 -4.5 Euro area -2.5 -0.1 0.2 0.1 -4.0 -4.0 Poland 0.3 0.5 0.1 0.0 -1.4 1.0 United Kingdom -2.4 -0.7 0.2 0.5 -3.8 -4.3 EU27 -2.4 -0.2 0.2 0.1 -4.0 -4.0 The rate of consumer-price inflation declined in the first half of 2009 driven mostly by the base effects of past hikes in energy and food prices. Inflation seems to have reached a trough of 0.2% in July in the EU (-0.7% in the euro area). Inflation rates are projected to increase towards the end of the year as base effects reverse and commodity prices are on the rise. For the year as a whole, the outlook for consumer-price inflation remains unchanged at 0.9% in the EU for 2009 (and 0.4% in the Euro area). Quarterly HICP forecast Annual HICP forecast (%, year-on-year) (%, year-on-year) 2009 2009 Spring forecast Interim forecast 2009/1 2009/2 2009/3 2009/4 May 2009 Sep. 2009 Germany 0.8 0.2 -0.2 0.6 0.3 0.3 Spain 0.5 -0.7 -0.8 0.9 -0.1 0.0 France 0.7 -0.2 -0.6 0.2 0.2 0.0 Italy 1.4 0.9 0.1 1.1 0.8 0.9 Netherlands 1.8 1.6 -0.1 1.2 1.4 1.1 Euro area 1.0 0.2 -0.3 0.7 0.4 0.4 Poland 3.6 4.3 4.2 3.3 2.6 3.8 United Kingdom 3.0 2.1 1.3 1.1 1.0 1.9 EU27 1.6 0.9 0.3 0.9 0.9 0.9 The financial crisis has hit the Italian economy with declining exports and production, increased unemployment and a reduction in GDP of -6% on an annual basis, per the second quarter of 2009. The government has little room for manoeuvring - given the EU's highest public debt and a budget deficit at odds with Maastricht criteria. Paradoxically, this means that the black economy is a safety net for many. Italian economy had major structural problems before the financial crisis; the crisis has exacerbated the whole thing. A comprehensive emergency package is adopted, consisting mainly of reallocated budget funds. Italian economy has long been deadlocked and the financial crisis has only helped to increase the problems. Approximately 8 million lives according to government statistics on the poverty level or below. Reduced demand on the world market affects Italy's export-oriented industry hard, with negative repercussions in the domestic economy in general. In the first quarter 2009 production level went down by 9.8% over the previous quarter, a decline unprecedented in Italian post-war history. GDP showed in the second quarter, a decline of minus 6% on annual basis, and the prognosis is not optimistic for 2009/2010. The costs related to social security at its highest since 1993, tax revenue is decreasing and the deficit in the budget balance increases. The government has abolished a number of the Prodi- government's initiatives to reduce the extent of tax evasion. On the positive side, the banking sector is in very little affected by the crisis, which among other things, has to do with conservative investments, lending policies and low debt levels for private customers. The high proportion of black economy contributes also to limit the financial crisis effects on the population. It attracted attention that the debt-ridden FIAT Group in May managed to make a cooperation agreement with Chrysler, with 20% share rising to 35%. It is described here as a victory for 3 creative small Italian car technology. FIAT failed, however, with the Opel, after several weeks of negotiations. The Government's anti-emergency measures have been modest compared to other European countries. The initiatives have primarily consisted of re-allocation of existing budget funds. The government has sought to stimulate private consumption by supporting vulnerable households directly, and has introduced support for the automobile, white goods and furniture industry, but not much used. A recapitalization is made available for stock exchange banks, but very little used. As a result of the large public debt, pt. 105% of GDP, which is expected to increase to nearly 110% in 2009 and 2010, and a budget deficit of over 4%, the government has little manoeuvrability. Finance Minister's restrained approach to the crisis described as appropriate and has been positively received among economic experts (in the ECB, OECD, etc.), at the same time emphasized the vulnerable position the country is in. Berlusconi has on his side throughout the crisis appeared as an indomitable optimist: "Italy manages actually excellent “, was his repeated message. For the first time in ten years increased unemployment in 2008, and the trend continues in 2009. It is expected to be close to 9% this year, with the usual large differences between the North (about 4.5%) and South (approximately 13%). Inflation is declining as a result of the crisis (minus 1% from June to July), which can contribute positively to parts of the economy. Italy in the Crisis Challenges Important and increasingly negative government budget balance High and increasing public debt Black economy Sourch: The Economist NB! Huge geographical differences e.g unemployment Q1 2009: Italy 7,9%, Lombardy 5% and Sicily 14,3% 4 Other challenges Underdeveloped South Ageing population – few newborns Low R&D investments Low labour participation among women Young generation with precarious employment contracts Illegal immigration Organized crime Quality of life Ranks 17th out of 160 countries 1) Scores significantly better than it’s GDP per capita alone would suggest On top of all other Mediterranean countries, before core EU countries such as Germany, France and UK, as well as the US.