Country report Italy 2019

Country Report

  • Italy
  • General economic

28th May 2019

Due to economic stagnation, political uncertainty and tighter credit conditions business insolvencies are forecast to increase by more than 5% in 2019.

 

italy
italy
italy

Insolvencies increasing again after four years of decreases

In line with Italy´s economic rebound over past years, corporate insolvencies registered annual declines between 2015 and 2018, but the number of insolvencies remained much higher than in 2008 (7,500 cases).

Due to economic stagnation, increased political uncertainty and tighter credit conditions it is expected that business insolvencies will increase again in 2019, by about 6%. Liquidity problems of Italian businesses are still exacerbated by continuing poor payment behaviour, especially by the public sector. With the exception of the food and chemicals sector, payment duration in other key sectors remains very long (90-120 days), putting strain on the financials of mainly smaller suppliers.

 

italy

The economy has entered recession

After a modest rebound seen over the past two years Italy entered recession in H2 of 2018, and zero GDP growth is forecast for 2019, mainly due to subdued domestic demand. Private consumption is expected to remain weak, while fixed investments and industrial production are forecast to contract this year.

Additionally the economic outlook is clouded by political uncertainty, slow banking sector recovery, tighter credit conditions and a slowdown in global trade and eurozone demand.

While the state of the Italian banking sector has improved since 2017 due to certain government actions (e.g. recapitalisation), many banks still suffer from non-performing loans, high operating costs and low profitability.

Previous reform efforts have been insufficient to boost higher growth rates, and Italy´s competitiveness has not significantly improved compared to its EU peers. The new government has even withdrawn some key reforms.

Confidence in public finances is weak, as due to increased public spending the fiscal deficit is expected to increase more than 2.5% in 2019 and 2020, with the overly high government debt-to-GDP ratio rising further.

 

 

Related documents

Disclaimer

Each publication available on or from our websites, such as, but not limited to webpages, reports, articles, publications, tips and helpful content, trading briefs, infographics, videos (each a “Publication”) is provided for information purposes only and is not intended as a recommendation or advice as to particular transactions, investments or strategies in any way to any reader. Readers must make their own independent decisions, commercial or otherwise, regarding the information provided. While we have made every attempt to ensure that the information contained in any Publication has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in any Publication is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from its use, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in any Publication, or for any loss of opportunity, loss of profit, loss of production, loss of business or indirect losses, special or similar damages of any kind, even if advised of the possibility of such losses or damages.