Favorable wind for Italian export

Favorable wind for Italian export

December 13, 2017

claudio.colacurcio@prometeia.com

The XV ICE-Prometeia report confirms a positive trend

 

"Hope makes us regard what we desire, and fear what we are afraid of, as being probable and near, and both magnify their object."

It is a sentence of Arthur Schopenhauer, two centuries old, but still up to date. The XV ICE -Prometeia report on international trade used it to describe the scenario of world trade in the coming years. Global import of manufactured goods is about to grow by 4.6% in 2017 (y/y constant prices), much better than expected only one year ago. The fear of new protectionism and setbacks of some key markets (especially emerging) had led many observers to a very cautious view on the evolution of foreign trade as considering somehow structural the slowdown experienced in 2016.

 
 
Fig.1 GDP and world trade in manufactured goods (% change at constant prices)
Favorable wind for Italian export
Source: Rapporto ICE-Prometeia
 
 

International trade is growing well beyond the average of the world GDP

The numbers have been stronger than those fears and international trade is growing instead well beyond the average of the world GDP (Figure 1) in 2017. It is only a numerical and symbolic threshold, but for this very reason, it’s also useful to reaffirm the contribution of internationalization to global development. This favorable result (for the two-year period 2018-'19 average annual growth will remain above 5%)  lays on consolidation of the recovery in mature economies and a strong rebound of the emerging world. Looking at the so-called Brics in particular, three out of five would pass from decreasing import to growth; five out of five will improve.

 
 
Fig.2 Imports of the Brics 2016-'19 (% change at constant prices)
Favorable wind for Italian export
Source: Rapporto ICE-Prometeia
 

Looking at sectors, the current year experienced a favorable return of the investment cycle. For mechanics, the first export sector for Italy, it is estimated that world import demand will grow at 4.2% this year and further accelerate in 2018. As regarding consumer goods, after a moderate 2017, both the fashion system and furniture will benefit of growth in world imports between 6.5 and 7% over the next two years.

In general, the trend of Italian export (towards the 450 billion target in 2017) and the recent dynamic of its market shares shows national companies have generally been able to defend competitive positions, if not increase the position on some key markets (United States in particular) despite a critical season for world trade.

The challenge today is to move from defense to attack, continuing a virtuous path even when the exchanges are moving at higher speed and on less familiar geographies, especially for the new emerging Asian countries (Vietnam, Indonesia, Philippines) and the African ones (Kenya, Ethiopia, Ghana among the most dynamic). The goal is certainly ambitious and not risk-free in the current scenario, but bringing back and adapting Schopenhauer, it is better that this target will be supported by hope than diminished by fear.