Italy Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Italy is a founding member of the Economic and Monetary Union. It adopted the euro common currency on January 1, 2002. With the opening of the European single internal market in 1993, customs controls and customs duties at the internal borders of the EU disappeared. With the accession of the Czech Republic to the EU on May 1, 2004, bilateral trade with Italy became part of intra-community trade. Italy ranks eighth in terms of value share of world exports and eleventh in terms of value share of world imports. The main outlet for Italian exports is Germany, followed by France and the United States. The majority of Italian exports go to the European Union, while China is the tenth largest market for Italian exports. Italian exports in 2021 increased by more than 18% year-on-year. Both the volumes of goods sold abroad and their unit prices grew. For the year In 2021, exports recorded strong dynamics and reached a higher level than in 2019. At the same time, however, imports also increased by almost a quarter, mainly due to the rise in raw material prices. However, the foreign trade balance remained in surplus by more than EUR 50 billion. There is increasing interest in Italian products on international markets, especially in the European Union, where growth is higher (+20%) than in non-EU markets (+16.3%). The Italian Ministry of Foreign Affairs, together with the Ministries of Economic Development and Agriculture, has launched an export promotion plan worth EUR 605 million for the period 2021-2024. The fund is managed by ICE (Italian Export Promotion Agency) and is used to finance pro-export events and fairs. Part of the funds will also go to small, medium and micro enterprises and startups, chambers of commerce abroad, to attract foreign investments, the participation of companies in foreign tenders and the valorization and protection of Italian food brands abroad. Exports mainly involve the chemical, pharmaceutical and food industries, but also metals and machinery and equipment.

  • Allcountrylist: Overview of major industries in Italy, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 227 102.1 239 282.7 245 447.2 224,792.8 267,422.1
Imports into the EU (million EUR) 230,014.60 239,453.80 241,670.50 217,886.70 269,805.2
Balance with the EU (million EUR) 2,912.5 171.1 -3,776.7 -6,906.1 2,383.1

Source: European Commission

Trade relations with the Czech Republic

Italy is the 6th most important trade partner of the Czech Republic, which is evidenced by the development of foreign trade, which is constantly increasing and in 2021, the turnover reached a record volume of EUR 1billion. As one of the few countries, the Czech Republic has maintained an active trade balance for a long time. In 2021, exports from Italy to the Czech Republic increased by almost a quarter to EUR 7.56 billion. Sales of Czech goods to Italy increased by 14.5% to EUR 7.4 billion. On both sides of the trade exchange, means of transport and the automotive industry are the most prominent elements. In addition to cars and motor vehicles such as tractors, buses and their components, reactors and boilers, electrical devices are also exported from the Czech Republic. recording, sound and TV image reproduction, car machines. data processing, tobacco products, iron and steel products, plastics, optical instruments, glass, paper and paper products and food products.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 160 170.2 174.3 171.7 190.3
Imports to the Czech Republic (billion CZK) 173 167.5 168.9 160.1 194.3
Balance with the Czech Republic (billion CZK) 13 -2.7 -5.4 -11.6 4.0

Source: CZSO

Trade relations with countries outside the EU

In 2021, Italian exports to countries outside the EU increased by 16.3%, reaching a higher level than in 2019. According to ISTAT data, the increase in imports in 2021 was +27.7%, and is mainly explained by the increase in the purchase of energy products and intermediates.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 204 204.9 226,042.70 234,904.90 211,925.00 246,456.70
Imports to countries outside the EU (million EUR) 155 140.0 188,300.2 162,084.6 144,950.3 198,586.10
Balance with non-EU countries (million EUR) 49,065.0 39,517.6 49,530.2 55,078.5 47,870.60

Source: EIU, Eurostat

Foreign direct investment

Italy is currently one of the 20 countries in the world with the largest volume of foreign capital. Foreign direct investment in Italy reaches EUR 531 billion, thanks to the country’s high attractiveness and positive perception in the international context. 2021 saw a significant increase in investment activity in Italy, with 705 transactions recorded during the year (+27.3% compared to 2020) with a total volume estimated at €8billion, a figure never seen before was not recorded and which significantly exceeds the volume of EUR 39 billion recorded in 2020 (+122.1%). The strategic sectors for 2022 are telecommunications, life science and energy. However, there are still uncertainties associated with the development of the pandemic, inflation and war. The main investors are the United States, France and Germany. The northwest proved to be the most attractive area, followed by central Italy (24%). Among the critical points highlighted by foreign investors are regulatory uncertainty and excessive bureaucratic burdens for doing business. Tax and cost reductions and support for small and medium-sized enterprises are areas where there is room for improvement, according to the investing companies. The Ministry of Foreign Affairs and International Cooperation of Italy, in coordination with the ICE Foreign Trade Support Agency, has implemented a program to strengthen the network of ICE foreign offices dedicated to attracting investors.

In the 1990s, the interest of Czech investors in Italy was directed towards the field of tourism and related services (hotels, guesthouses, restaurants, bars). Tourism remains an attractive area due to Italy’s cultural heritage and natural beauty. The relatively quick return on investment in photovoltaic power plants motivated some Czech entities to invest in the past. However, in 2011, the Italian government began a gradual change in the favorable conditions. In connection with the program of the current government, which has set as one of its goals the so-called green lot and the decree to restart Italy after the coronavirus, supports ecological investments, this area is gaining attractiveness again.

In the context of relatively limited investments by Czech entities in Italy, the acquisition of seven thermal power plants by Energetický a průmyslový holding (EPH) from E.ON in January 2015 represented a breakthrough. These are six gas and one coal-fired power plants on the Italian mainland, Sicily and Sardinia with a total with an installed capacity of approx. 4500 MW. The transaction took place in 2015 following the receipt of approval from the EC antimonopoly authorities. The price for the transaction was not disclosed, however, it is the largest Czech investment in Italy ever. In December 2017, this company supplemented its power plant portfolio with the acquisition of 2 biomass thermal power plants, thus entering the Italian energy market also in the RES segment. It further strengthened its position in the RES sector through its subsidiary EP New Energy Italia (EPNEI) by completing the acquisition of the Fusine power plant. This is another of EPH’s investments in the biomass sector. 4 investors, including the Czech group Dr. Max., a company controlled by Penta, owns 14 pharmacies in Italy.

Sazka Group owns 32.5% of the Italian lottery Lotto and has become one of the largest lottery operators in Europe. Radovana Vítka’s CPI Property invests in cooperation with Italian real estate agencies mainly in Rome and the south of the country. It also invests in tourism and owns the Relais del Cardinale hotel complex in Brindisi. The company has development projects in Rome, Bologna and Milan. In addition to the above, several representatives of Czech companies operate on the Italian market in the field of beverages (mainly beer), consumer goods and food.

FTAs and treaties

Treaties with the EU

Italy has been a member of the European Union since January 1, 1952, and is a member of Schengen and the Eurozone. Together with other EU member countries, Italy therefore creates a single currency and customs area. Italy participates within the EU in preferential agreements facilitating mutual trade. Italy has become the first G7 member to join China’s new Silk Road global infrastructure initiative. The Italian government signed a Memorandum of Understanding with China in 2019.

Contracts with the Czech Republic

The basic contractual document governing, among other things, the conditions for the development of economic and trade relations, is the Treaty on the Accession of the Czech Republic to the EU, whose ratifications by the Czech Republic were deposited with the Government of the Italian Republic on November 3. 2003.

Basic contracts and agreements in the economic field:

Agreement between the government of the Czech Republic and the government of Italy on the development of economic cooperation dated 4 November 1997, which entered into force on 8 February 2001 after ratification by the Italian side

Agreement for the Avoidance of Double Taxation in the Field of Taxes on Income and the Prevention of Fiscal Evasion of May 5, 1981

Agreement on friendly relations and cooperation dated January 23, 1996, entered into force on March 21, 1998. As of December 31, 2008, it was terminated by agreement of the contracting parties

Agreement on the support and protection of investments between the Czech Republic and IR dated 22.1.1996, which was valid from 1.11.1997

The following agreements also apply:

Agreement on international road transport, Agreement on the settlement of open financial and property issues,, Agreement on cooperation in the veterinary sector, Agreement on cooperation in the field of science and technology, Agreement on air transport, Memorandum of understanding on cooperation in the field of small and medium-sized enterprises, Memorandum on understanding and cooperation between the Ministry of Transport of the Czech Republic and the Ministry of Infrastructure and Transport IR, the Cultural Agreement between the Czech Republic and Italy, which was already discussed in 2000, was signed on February 8, 2011 in Prague. On the Czech side, the approval process was completed with the signing of the agreement by the Minister of Foreign Affairs, and in Italy it went through the ratification procedure and entered into force on 1 March 2017.

Developmental cooperation

On In 2014, Italy’s new law on development cooperation entered into force. The managers of Italian development cooperation are the Ministry of Foreign Affairs and International Cooperation of Italy (administers approx. 1/3 of the funds intended for development aid) the Ministry of Economy and Finance of Italy (administers the remaining 2/3), which are designated as capital deposits in banks and development funds, for restructuring or forgiveness of debts and for contributions to EU funds. In addition to these ministries, other ministries, regions and local government offices participate to a limited extent in development assistance.

The Italian Agency for Development Cooperation (AICS) ensures the technical-operational part of the Italian system of development cooperation. AICS, which has legal personality under public law and is subject to the authority and supervision of the Ministry of Foreign Affairs, manages and controls development cooperation initiatives and provides assistance and technical support to central and local public administrations in development cooperation projects.

Italian development cooperation priorities in terms of sectors include: strengthening good governance, agriculture and food security, education, health and the development of private business. Migration prevention projects have recently been added to these priorities. Compared to OECD countries, Italy is not one of the largest providers of funds for development cooperation and is repeatedly called upon to increase the share of development funds. In 2021, it allocated EUR 6 billion for development cooperation (EUR billion in 2020), which amounts to 0.28% of Italy’s GNI.

Prospective fields of study (MOP)

Italy is the 8th largest economy in the world and the 3rd strongest economy in the Eurozone. It is the world’s 8th largest exporter and the world’s 11th largest importer. The tertiary sector generates 69% of GDP and employs 70% of people. Industry contributes 29% to GDP and 25% to employment. Tourism accounts for 12% of GDP. Exports for 2021 reached a record volume of 516 billion euros, and its main items are traditionally engineering products, petroleum products, medicines and cars. Italy is the sixth most important trade partner of the Czech Republic. During the pandemic, the Italian government released over EUR 250 billion to support the economy. Italy received EUR 19billion from the Recovery Plan. GDP growth for 2021 was 6.5%. Growth of 2.2% is expected for 2022, as the recovery is hampered by rising energy prices, which have increased more than six times in the last 2 years. Russian aggression in Ukraine will also result in a revision of the VAT growth estimate. The country has long-term high unemployment, which now stands at 9.2% (youth unemployment is 27.5%). A negative phenomenon is the persistent decrease in the number of self-employed persons. Italy’s national debt reached a record of €trillion – 159.8% of GDP

Infrastructure and transport

As part of the Recovery Plan, EUR 96 billion will go to infrastructure in approximately 102 projects. Tram lines will be expanded or established and revitalized in a number of cities. Italian Railways, in addition to the continuous change of the rolling stock, is concentrating on strengthening the railway connection between the Apennine Peninsula and other parts of Europe, on the project of high-speed freight transport and building east-west corridors. Opportunities can be found both in the track infrastructure being built and in the delivery of cars or their parts. Information about tenders issued is published on the website of the Italian Railways purchasing portal, which is a reference point for suppliers. In general, large companies keep a register of suppliers and tenders issued are intended for registered entities, but are often open to foreign companies as well.

Defense and space industry

Italy is one of the major players in the field of the European defense industry and a strong supporter of the trend towards the consolidation of the European armaments policy. It actively supports international defense-industrial cooperation, especially in high-tech sectors, but also in the field of aviation, control and command systems, communication and electronic systems and software or avionics. Technological companies whose production operations are certified according to the standards of the European Space Agency (ESA) can participate in a long series of international space projects that are being implemented in Italy and French Guiana. Opportunities can be found in the field of subcontracting for individual companies or in the field of software.

ICT and digitization

As part of the Recovery Plan, the government allocated 40 billion euros for digital transformation and the development of 5G networks. Specific objectives: digitization of industry with a special emphasis on small and medium-sized enterprises, and emerging technologies such as artificial intelligence and blockchain, increasing the free flow of data, improving connectivity and social inclusion, supporting the development of smart cities. Opportunities can be found in the areas of software, established operating models, applications or in the logistics area.

Water management sector

The Italian government has set aside 15 billion euros in the Recovery Plan, which it will invest in the repair of the water supply infrastructure. The goal is to modernize the drinking water distribution network, reduce anthropogenic pressure on water ecosystems. Climate impacts are also to be mitigated, new and modern treatment plants are to be built, and sewage networks are to be intervened. Opportunities for Czech companies producing and supplying products, services and technologies in the field of water management on the Italian market (drinking water treatment, wastewater treatment, construction of related infrastructure, treatment of ecological burdens and damages)

Healthcare and pharmaceutical industry

As part of the Recovery Plan, EUR 1 billion is flowing into the healthcare sector. The financial amount is divided into two components: the development of telecommunications and information technologies for telemedicine for territorial health care (7 billion); innovation, research and digitization of the state healthcare system (8.63 billion). These are strategic sectors such as the production of medicines including vaccines and advanced therapies, active ingredients and intermediates, medical devices and diagnostics, biotechnology, nanotechnology, digital therapy, bioinformatics, other medical goods and technologies). The aim is to strengthen national and European strategic autonomy. Opportunities can be found in the area of ​​production and cooperation or sub-supplies of active substances.

Automotive Industry – Clean Mobility

The Italian state and companies are investing in electric mobility and the electrification of cars. The car company Stellantis has set aside 30 billion euros, with which it wants to bring the price of electric cars to the level of cars with a combustion engine by 2026. The state allocated EUR 23.78 billion (EUR billion from the Recovery Plan) as part of the “Green Revolution and Ecological Transition” program for the transformation of the current fuel distribution network. The priority is to expand the network of charging stations according to the National Infrastructure Plan for recharging electric vehicles and a unified platform. The Ministry of Ecological Transition is working together with the Ministry of Infrastructure and Sustainable Mobility on a strategy to align the development of charging infrastructures and electricity networks, especially in the case of high-performance charging stations. Opportunities can be found in manufacturing, building infrastructure or software.

Italy Trade