Regions and countries

The contraction in world trade in 2009 had widespread effects on flows between Italy and almost all of its partners. The present recovery is also broadly based, but its strength varies across regions and countries. Trade is expanding rapidly with emerging countries (China, India, other Asian countries and especially Mercosur and Turkey), while exports to the European Union, the United States and Japan are reviving more slowly. The strong rebound of imports from commodity-producing countries is still not accompanied by a sufficient recovery in Italian exports. The reduction in the trade deficit in 2009 derived from the improvements in the balances with commodity-producing countries, due to the fall in the prices of imports, and with emerging countries, due to the recession-induced decline in Italian imports of intermediate and capital goods. These changes more than offset the deterioration in Italy’s trade balances with Europe and North America, which was the result of a larger drop in exports than imports. In 2010 the bilateral trade balances are worsening, particularly with the commodity-producing countries, owing to rising raw materials prices, and vis-à-vis the European Union. The renewed decline in Italian exports’ market shares in the two years of the crisis involved almost all the world’s regions, notably the European Union and Latin America. Gains of share by comparison with 2007 were recorded in the non-EU European countries, North Africa and some Asian markets, including China. To some extent they may be connected with the exports of intermediate and capital goods stimulated by Italian firms’ internationalization of production. The collapse of world trade at the height of the crisis appears to have had only transitory effects on the density of the network of bilateral trade.7 The recovery now under way has reactivated flows that had ceased, even if they have yet to make good all of the losses. Like others, Italy’s network of bilateral trade is basically intact. Nevertheless, the geographical distribution of Italian exports is still relatively underweight toward the emerging countries of Asia by comparison with that of Germany, and this reduces the speed with which Italy absorbs the benefits of the present recovery. However, some signs of a more favorable reorientation have appeared in recent years, especially for capital goods. The data on cross-border affiliates, available only up to 2008, indicate that the European Union’s share of Italian affiliates abroad and foreign affiliates in Italy declined in the context of a widespread slowdown in direct investment.