Italy

Market overview

On 28 April, Italy's Prime Minister released a plan outlining Italy's economy reopening, beginning with factories and construction activities, retail stores, museums and hair salons, and eventually 'higher risk' services such as restaurants.

All retail is now open as long as social distancing and hygiene measures are followed. Restaurants, cafes and bars have also opened with limits on the number of people who can enter.

You can read more about Italy's response to COVID-19 on its Civil Protection website here.

For more information on doing business in Italy, visit myNZTE - our free online portal for curated, in-depth information and guidance.   


Economy and trade

On 31 March, business group Confindustria released a report warning that Italian GDP could drop by as much as 10% in the first half of 2020 and by 6% by the end of 2020 as a result of the crisis. The report projected a deficit of 5% of GDP in 2020 and for the debt-to-GDP ratio to soar to 147% due to both increased spending and plummeting GDP.

The International Monetary Fund (IMF) has predicted Italy's GDP to contract by 9.1% this year, with a partial bounceback to 4.8% growth in 2021.

Supply chain, freight and logistics

Retailers and manufacturers in Italy are making enormous efforts to keep goods flowing through the supply chain, and are well used to handling large increases in demand.

Government support

The Italian Government announced a range of economic measures in response to COVID-19 under the so-called 'Cure Italy' Decree, which came into force on 17 March 2020. Read the decree in Italian here.

  • Up to 800,000 affected businesses will benefit from state loans guarantees worth up to 25% of a company's annual turnover and the suspension of VAT and other payments to the state, provided no employees are laid off.

  • Loans to SMEs will be 100% guaranteed by the state. The maximum amount will depend on the size of the businesses, ranging from 15% of turnover to up to 25% for smaller companies (those with turnover under €3.2 million). Interest rates range from 0.2% - 0.5%.

  • In case of reduced or suspended business activity due to COVID-19, certain existing 'social shock absorbers' will be funded and made available to qualifying employers such as 'CIGO', 'Fondi di Solidarietà Bilaterali Alternativi' and 'FIS'.

  • Support has also been made available to businesses and self-employed workers in the form of tax breaks and one-off cash payments.

Advice to exporters

In terms of immediate activity, make the safety and wellbeing of teams your priority, and invest as needed to ensure a safe and healthy working environment. Many businesses are still allowing employees to work from home where this is possible. Check in with your business partners and see how they are doing and how you might be able to support them during this time.

Consumer sentiment

McKinsey has carried out a survey on Italians during the COVID-19 crisis. The survey found that Italian consumers are adjusting to the realities of the economy and spending less, but consuming more digital media.

  • Italian consumers are pessimistic or unsure about Italy's economic outlook, with 33% believing that COVID-19 will have a long-lasting impact on the economy and that Italy will experience a recession

  • Over 50% of Italians expect a reduction in their income over the next two weeks, with over 83% believing their finances will be impacted for more than two months

  • 48% of respondents are not making purchases or investments they would otherwise make because of the economic uncertainty.

Travel

From 9 July, anyone who enters Italy from any foreign location is required to deliver a self-declaration, accessible on the government website.

Italy's borders remain closed to a number of countries. However, travel to and from member states of the EU is allowed. Following EU recommendations, Italy is also allowing citizens from some non-EU countries to enter, including New Zealand.


Sector insights

As is to be expected, numerous sectors have been impacted by the COVID-19 pandemic. Below you'll find information on any COVID-19 effects across important sectors and industries in Italy.

Fashion and textiles

Exports of New Zealand wool, hides and skins and other materials for the fashion and design sectors (which together represent 60% of annual goods exports to Italy) are currently suspended because of the disruption in long-haul logistics and current lockdown of Italian customers.

The Italian fashion and textile sector, famous for the coveted 'Made in Italy' labelling, is a large segment of the Italian economy with revenues of over €90 billion in 2019. Now, the Italian Federation of fashion retailers predicts a drop by at least 50% of revenues in 2020.

Fashion and textiles will be one of the most affected sectors in Italy in the short/medium term, due to declining demand in China and Asia, the production lockdown of non-essential Italian businesses, and a declining tourism sector leading to decreases in consumption.

An ongoing European Apparel and Textile Confederation (Euratex) poll shows that 80% of apparel and textile companies in Europe are already laying off their workers, with more than a half expecting a drop in sales and production by over 50%.

However, the Italian fashion and textile industry could benefit from suppressed demand internationally once the country is out of crisis (the Chinese Hermes shop in Shanghai sold over $2.7 million on its first re-opening day). The fashion industry has been highlighted as a sector that may be able to return to production soon.

Factors that may help Italy's fashion industry rebound from any losses experienced due to COVID-19 include:

  • the robust performance of fashion sold online, with high levels of stocks available

  • the improved reputation of luxury brands, such as Gucci and Prada, that have pivoted to assist during the crisis by creating face masks and hand sanitiser

  • companies rethinking their business models, customer engagement and localisation strategies.

For New Zealand exporters

While Italy's fashion industry has experienced a downturn in light of COVID-19, it will also be ready to re-start at a faster pace – creating a demand for suppliers to be prepared to innovate with them.

There is potential for New Zealand's reputation for quality and sustainability to become more valuable in this space. Goods that may succeed here include New Zealand wool, hides and skins, and yarns.

Additional resources

Below you can find information and contact details for other New Zealand government and international agencies regarding their response to COVID-19.

New Zealand Government agencies

Covid19.govt.nz
COVID-19 helpline for businesses
Business.govt.nz
New Zealand Customs
Ministry for Primary Industries (MPI)
New Zealand Export Credit (NZEC)
MFAT Export Helpline
MFAT Safetravel
Callaghan Innovation
Immigration
Ministry of Health
WorkSafe New Zealand
myNZTE

Global agencies

World Health Organization (WHO)
Centers for Disease Control and Prevention (CDC)

Contact NZTE

We're available to talk to you about any issues your export business is facing due to COVID-19.

For existing NZTE customers, please contact your New Zealand-based Customer Manager.

If you're unsure who to contact or haven't worked with us before, you can call NZTE on 0800 555 888 or email below and one of our Customer Advisors will help you.