italy - economy and politics 50 days after the referendum
TRANSCRIPT
Italy - Economy and Politics
50 days after the Referendum
European Policy Dialogue
The referendum suicide of Renzi
2
Who plays the cards?
„Italy is like a house of cards“
Cover 2013 Cover 2013
3
• New Election Law
• Consolidation Banking Sector
• Youth Employment
• Migration
• Economic growth
• 60th Rome Treaty
• Presidency of G7 Summit
Political Agenda
2017
Cover 2016
4
German-
Italian
Business
Facts and Figures
0
20.000.000
40.000.000
60.000.000
80.000.000
100.000.000
120.000.000
2007 2008 2009 2010 2011 2012 2013 2014 2015
Import from Germany Export to Germany
Strengthened trade relation: Italian export record to Germany
Italian-German Trade
6
Source: AHK graphic; Destatis
-30.000.000
-20.000.000
-10.000.000
0
10.000.000
20.000.000
30.000.000
40.000.000
50.000.000
60.000.000
70.000.000
2007 2008 2009 2010 2011 2012 2013 2014 2015
EXPORT to Italy IMPORT from Italy Trade deficit
Positive development: Trade deficit reduced by almost 10%
Italian-German Trade
7
- 18,1% - 8,4%
Source: AHK graphic; Destatis
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
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
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
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
Economic
Policy
Framework
Opportunities and Threats
• 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
-6,0
-5,0
-4,0
-3,0
-2,0
-1,0
0,0
Budget deficit continuously <3%
Italy's Financial Performance
14
Source: Italian Gov., OECD, de.statista.com
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
Public debt continuously >100%
-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
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
Italian
Financial
Sector
Crucial factor for growth
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
The impact of 6 years of recession (2009-14): High stock of NPLs
The dead hand of bad debt
Italys NLP as Share of GDP
NLPs by Region
Source: IMF, blackrock.com
19
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
41,8 35,3
24,4
8,7 7,6 2,9
14,7
73,1
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
Germany Swiss Northern Europe Italy
Level 3 Assets NPL
Debt structure comparison of European Banks with Italy’s Banking system
Perspectives on hidden risks in toxic assets
21
Source: R&S Mediobanca
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
50 days
after the
Referendum
…we worked
on a common German-Italian
Industry partnership 4.0
Jörg Buck
CEO
German-Italian Chamber of
Commerce (AHK)
Via Gustavo Fara 26 - 20124 MILANO
Tel. +39 02 67913.202
www.ahk-italien.it
24
Italy - Economy and Politics
50 days after the Referendum
European Policy Dialogue