After a long uphill battle out of the depths of an economic crisis, Italy’s economy is finally recovering, and even showing growth that surpassed economic projections. Europe’s third largest GDP expanded 1.6% in 2017, the country’s highest growth rate since 2007, with estimates for similar growth in 2018. However, economic growth is a battle the country has fought hard to create since its adoption of the euro in 1999. That’s what makes the role of Minister of Economic Development, Carlo Calenda, such an important one.
Calenda has played a large role in realising a positive economic output, and chalks up the country’s recent growth to the robust industrial sector and strong export production Italy has maintained since WWII. “We are number one in Europe as far as industry is concerned.” While Italians are famous for enjoying a good bottle of wine over a long meal, many are unaware that the country is an industrial powerhouse, and it has the numbers to prove it. In exports alone, Italy’s annual growth of 7% is outpacing France and Germany. “This year is going to be the record year for Italian exports.”
The “Made in Italy” concept has long been established as a reputable sign of high quality and craftsmanship, but Calenda points out that the country is profiting from more than just its famous consumer products. “When you think about Italy you often think about fashion, food and furniture, but in fact, what is happening is that we are exporting more equipment than fashion, furniture and food together.” He explains that the market for exporting Italian technology through equipment and machinery is increasingly steadily, given that other markets around the world are trying to develop themselves as industrial centres. “They need to buy the technology from Italy, in order to be able to achieve the results in terms of developing their own manufacturing sector.”
He happily reports that this is in addition to, not in substitution of, high sales in consumer products. “You have around the world a new affluent class that is growing, and wants to buy goods that are not only produced in Italy, but also designed in Italy, and this market is going to increase very much, the potential is huge.”
The ongoing development of Italy’s high performance industrial sector is a result of a jumpstart program the government implemented known as Industry 4.0. “We are going through an industrial revolution, what we call Industry 4.0, which is basically the digital getting into the industrial sector more and more, 360 degrees from supply chain to the sales process.” He explained that Industrial 4.0 is a financial and fiscal scheme that was put into place to buoy the economy after domestic sales dipped during the recession. The government invested billions into cutting edge technology and equipment in order to spur innovation and increase domestic production. “The magnitude of the scheme is 30 billion, so it’s huge and is producing very good results. After one year a level of investment in those technologies is up 11%, and is performing better than Germany, and better than any other European country. So the plan is working.”
Calenda also pointed to the country’s National Energy Strategy as an additional source of economic stimulus. While Europe is well known for being a pioneer in the development of renewable energies, Italy is not usually the first country that comes to mind. And yet, Calenda maintains that the southern European nation has long been outperforming its neighbours when it comes to renewable energy generation, which is what allowed them to reach their European 2020 renewable energy targets early. “On renewables, we have a long history of being first in Europe in terms of production. We have invested a lot of money…let’s say 14 billion per year in terms of incentives for renewables. So it has been extremely expensive, but this gave us the possibility to reach the European target before the date that was set. We want to continue on this path.”
The country’s National Energy Strategy is chock full of cross-border projects that are increasing its energy independence, a much needed change from Italy’s heavy reliance on Russian gas. “50% of the Italian gas is coming from Russia,” Calenda admits. “Russian gas, in the case of Italy, is coming through just one route– through Ukraine– which is another element of danger.” He noted that the country is actively involved in several multilateral infrastructure projects to diversify supply and increase regional collaboration. The EastMed project will bring together Israel, Cyprus, Greece, and Italy to create a national gas pipeline from the Middle East into Europe by 2025. Italy has also teamed up with Greece to create two energy diversifying projects: The Trans Adriatic Pipeline (TAP), which will bring natural gas to Italy via Albania and the Adriatic Sea and further on to Western Europe, as well as the Interconnector Turkey–Greece–Italy (ITGI), which will bring gas from Azerbaijan into Europe via Greece and Italy. “This year when there was the accident in Austria, we suddenly felt very, very fragile, as far as supply is concerned. This is why we think that the projects such as EastMed and TAP are crucial, and are crucial for all of South Europe.”
Calenda also pointed to the ongoing liberalisation of Italy’s electricity market, and the country’s recent announcement to end all coal generation by 2025. Given that the domestic electricity market only generates about 16% of its power from coal, Calenda says it’s an achievable goal in this sector particularly. “The target is achievable. What is very important is that we are able to implement all the infrastructure that we need in time.” He noted that the country’s close adherence to its National Energy Strategy will allow for the fruition of a coal free existence, and ensure that Italy indeed becomes the 4th country in the world to realise this commitment (following the UK, France, and Canada).
When it comes to creating a stable and cohesive European Union, Calenda said that collaboration is key. “What is crucial is to work together on migration, on security, defence and trade.” The leaders of Portugal, Spain, Malta, Cyprus, France, Greece and Italy gathered in Rome in January for the 4th South EU Summit to discuss the region’s biggest issues and its contributions to solving the EU-level obstacles like migration and economy. Calenda said that the role of all states in the bloc should be to offer a sense of security to its citizens, now more than ever. “For the time being the European citizens, their feeling is that they have a lot of threats coming from outside Europe, and it is the main, most important goal for Europe, to give the sense to the citizens that they are protected by Europe.”