Economic outlook and key market drivers of the Italian economy Innocenzo Cipolletta AIFI Chairman 14 June 2016 1 1
Some characteristics of the Italian economy The Italian Government has set out important reforms that will foster the public finance sustainability and improve the business environment The Italian economy is composed by a great number of innovative and export-oriented small and medium sized companies Italian companies need to grow in order to be able to face the international competition Many companies suffer from financial constraints and are heavily dependent on bank financing Private equity, venture capital and private debt can be an important support for the Italian companies, providing resources and know-how to foster their growth 2 2
The most important reforms in recent years TAXATION and PUBLIC FINANCE Tax wedge reduction for low-/medium-income employees Corporate tax (IRAP rate) reduction Cuts on property tax (IMU) Comprehensive programme to streamline public spending BUSINESS ENVIRONMENT INSTITUTIONS Reforms of the banking sector (regarding cooperative banks, foundations, non performing loans, ) Jobs Act for the labour market Reform of the civil justice system Simplification of the level of government New law for general elections New law-making process (acceleration of approval times) Reform of public administration Source: MEF Ministero dell Economia e delle Finanze 3 3
Good trend of public finance Best primary surplus/gdp ratio in the EU: +2.5% Public debt (GDP %) Public debt (net of aid, GDP %) GDP growth rate (current prices) 132.5 132.7 132.4 130.3 128.5 128.8 129.1 129.0 127.0 126.9 127.3 120.7 124.3 123.9 124.0 123.5 120.3 118.6 119.9 118.3 2.0 2.1 2.2 2.4 2.3 2.4 1.2 0.4-1.4-0.4 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: MEF Ministero dell Economia e delle Finanze (April 2016), IMF (October 2015). Ministero dello Sviluppo Economico Italian Trade Agency 4 4
The Italian economy in the next years: macroeconomic indicators Prospective growth of Italian economy % of GDP Source 2015 2016 2017 IMF 1.0 1.1 GDP (growth rate) BdI 0.6 1.1 1.2 OECD 1.0 1.4 IMF 0.9 1.0 Private consumption BdI 0.9 1.5 1.4 OECD 1.3 1.3 IMF 0.8 1.9 Total investment BdI 0.6 2.9 2.7 OECD 2.7 3.7 IMF 4.4 4.8 Export BdI 4.1 2.3 4.2 OECD 2.1 3.8 IMF 5.1 4.0 Import BdI 5.8 4.1 4.8 OECD 3.2 4.3 Source: IMF (April 2016), Banca d Italia (June 2016), OECD Economic Outlook 99 Database (June 2016) 5 5
Leading manufacturers in world production (2013) Percentage on world manufactoring 1 2 3 4 5 6 7 8 9 10 6.2 5.3 3.7 2.7 2.6 2.5 2.5 1.9 14.1 32.8 2 nd manufacturing economy in Europe 8 th top world manufacturer Source: Ministero dello Sviluppo Economico Italian Trade Agency, Confindustria, elaborated by CSC on IHS and ONU data 6 6
UK Germany Filand France The share of SME employment in Europe Denmark Sweden Netherlands Romania Croatia Luxembourg Poland Austria Czech Rep. Hungary Belgium Slovak Rep. Irland Slovenia Spain Bulgaria Lithuania Estonia Latvia Portugal Italy Malta Cyprus Greece 87% 82% 83% 76% 77% 78% 79% 79% 80% 73% 73% 70% 70% 70% 71% 71% 63% 64% 64% 65% 66% 67% 67% 67% 68% 68% 68% 54% Note: share of SME employment in total employment Source: European Commission 7 7
The financial structure of European companies Financial structure (2013) Composition of debt (2013) Equity Debt Other debt Banking debt 83% 79% 68% 64% 54% 98% 93% 92% 80% 77% 46% 32% 36% 17% 21% Spain Italy France Germany UK 2% 7% 8% 20% 23% Spain Italy Germany France UK Source: analysis by The European House Ambrosetti based on MISE and Bank of Italy 8 8
The startup ecosystem in Italy: the adoption of Startup Manifesto 5,803 Innovative startups Darker countries have adopted most of the Startup Manifesto recommendations; lighter countries should do more work. 3,000 Business angels 96 Incubators and business accelerators 43 Technology parks 20 Venture capital players 49 Start up competitions Source: Camera di Commercio, Osservatori.net Politecnico Milano, AIFI, European Digital Forum Crowdsourcing Network 9 9
Conclusions Italy is characterised by a huge number of innovative SMEs: export-driven high-dependent on debt that need to grow that are undertaking generational changes! The time to invest in the Italian private equity and venture capital industry is NOW! 10 10
Economic outlook and key market drivers of the Italian economy Innocenzo Cipolletta AIFI Chairman 14 June 2016 11 11