Economic Profile - Italy
Currency: Euro (EUR)
|GDP (USD billions)||2,071||2,204||2,221|
|Per capita GDP (USD)||36.0||36.3||36.3|
|Real Growth in GDP||-1.9%||0.7%||0.8%|
|Current Account (GDP)||-0.3||2.1||-2.6|
Foreign Direct Investment
- Value: $1.3 billion
- Rank: 28st largest investor in Canada
- Share of FDI in Canada: 0.2%
- Recent trends: Starting at $321 million in 1990, FDI stock from Italy gradually rose to a peak of $1.4 billion at the end of 2003. During the next five years, it gradually eased down to $972 million by the end of 2008 before rising again to $1.4 billion in 2014. By the end of 2016, it edged down to $1.3 billon.
- Rank: At the end of 2016, Italy ranked as the 28st largest investor country of FDI stock in Canada. In terms of European countries, Italy ranked 15th.
Source: TCS Offices in Italy
Trade Agreements and Canadian Trade with Italy
Membership in Trade Agreements and Other Multilateral or Trade Agreements
Italy is one of the founding members of the European Union and is one of the countries participating in the European economic and monetary union (EMU), which brought about the euro as their shared common currency. It was also a signatory to the Schengen agreement, which permits free movement of persons between participating EU countries. Under the European Economic Area (EEA) agreement, the EU and three of the four European Free-Trade Association (EFTA) member states constitute an enlarged single market. The EEA extends EU commercial law to the EFTA states, thereby providing for the free circulation of goods, services, capital and labour, giving businesses the right to establish themselves or subsidiaries throughout the EEA. Other commercially significant international agreements include numerous bilateral tax treaties.
Canada and Italy have an Established and Growing Commercial Relationship
Trade is of high importance to Italy’s market and the potential for Canadian companies is strong. This has led to numerous activities and opportunities in order to establish mechanisms which support commercial and people exchanges. In 2015, Italy was Canada’s 7th largest export destination in the world and the 2nd largest in Europe.
Main Canadian Exports to Italy: Sectors, Products and Services
Canadian exports increased slightly by 2.7% in 2016, totalling $2.34 billion, up from $2.27 billion the previous year. In comparison to the last five years, the trend in overall Canadian merchandise exports is one of positive and steady growth. Pharmaceutical products, cereals and mineral fuels rank among the top 3 primary products exported in 2016, amounting to 47.8% of total exports. Major highlights include a surge of 222% in crude oil exports worth $238 million, a rise of 144% in aircraft launching gear reaching $98 million and an increase of 118% in skin care cosmetics. Canadian imports from Italy continued to improve with upward growth of 2.3% totalling $7.54 billion compared to $7.37 billion in 2015. Machinery, beverages and, vehicles (parts, motors) rank among the top 3 items, accounting for 40% of total imports from Italy. Italy ranks 8th in the world and 3rd in Europe as a source of total imports to Canada.
Main Canadian Imports from Italy: Sectors, Products and Services
Despite the global financial crisis and economic slowdown, Canadian imports from Italy remain stable recovered with an increase 2.3% totalling $7.5 billion in 2015 from $7.4 billion in 2014. Italy ranks 8th largest in the world and 3rd largest in Europe, as a source of total imports to Canada.
Nuclear Reactors and machinery ($1.8b), beverages ($598m) and vehicles (parts and motors) ($536m) rank among the top 3 items, accounting for 40% of total imports from Italy. Imports overall grew across most HS codes. Canadian imports of Italian beverages showed an increase of 4.2%; Footwear by 22%; and furniture continued to grow producing a 13% increase compared to 2015.
In 2016, two-way trade between Canada and Italy totalled C$9.88 billion, making Italy our 8th largest global merchandise trading partner, and Canada's 3rd most important in the EU.
Source: World Trade Atlas, EIU, TCS Offices in Italy.
Opportunities and Challenges
- The driving force of the Italian economy is its manufacturing sector, especially small- and medium-sized companies specializing in goods which call for top-notch design and engineering. Manufacturing accounts for 90% of Italy's exports.
- Italy is known for its high concentration of small firms. Over 90% of its industrial firms have fewer than 100 employees and almost 90% of firms have fewer than twenty workers. The average size of Italian industrial firms is seven employees.
- The current global financial crisis and economic slowdown has affected Italy and its EU neighbours. However, unlike its European partners, Italian industry has received little in the way of stimulus. Italy has, however, began to emerge from the most severe recession in 60 years, but growth is weak, uneven and will likely be restrained by structural challenges including a difficult business environment, high debt as well as an inflexible labour market. The IMF estimates real GDP will grow 0.9% by the end of 2016 and 1.3% in 2017.
- The difficulties within the Italian economy have opened the door to some interesting possibilities for Canadian companies both in terms of export development and investment attraction. Italian companies must diversify their market presence (investment abroad) while strengthening their competitive capabilities domestically (technology acquisition, alliances, joint ventures).
- Significant opportunities exist to promote FDI into Canada. Continued low growth prospects in Italy and Europe offer an opportunity to promote the benefits of investing and operating in Canada to Italian companies seeking growth in North America.
- Italy has identified Canada as a priority partner for S&T and investment, and sees Canada's ICT and scientific capabilities as complementary to those of Italy. This has resulted in a number of activities and opportunities to establish mechanisms that support commercial and people exchange. Canada and Italy are natural S&T partners with a focus on research dealing with quality of life issues (health, environment, energy, new materials).
- Italy is a strong supporter of an enhanced economic partnership with Canada and has been a proactive proponent of concluding CETA. A Canada-Italy free trade agreement will grow bilateral trade and investment significantly.
Source: TCS Offices in Italy
Additional Sources of Economic Information on Italy
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