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The U.S. and China boost Made in Italy in December and raise hopes for 2017

by Luca Orlando

Though the overall balance remains -1.2% in the red, Italy’s non-EU exports for December have grown by +2.5% (on a monthly basis): a 4.1% trend growth rate, which has brightened the outlook for ‘Made in Italy’ companies. This has propped up the balance for the entire year (€184 billion, €2.2 billion less than 2015), and can be interpreted as an optimistic sign for otherwise “lost” markets.

Ending 2016 with contained losses (losses which, in reality, become +0.2% if energy costs are excluded) is an almost undreamt-of result for ‘Made in Italy,’ after a disastrous first part of the year: seven consecutive months were deep in the red ink.

This recovery began in August, and has been convincing ever since (aside from October), particularly because it was spread across-the-board. According to ISTAT, the recovery was firmly strengthened in December with an annual performance that, if the working days had been the same of last year’s, would grow by over two points: from +4.1% to +6.2%, tendentially.

Few areas suffered setbacks in December (Switzerland, Northern Africa, slight losses for the Middle East) while progress was strong and widespread in other places.

The United States, Italy’s primary non-EU export market, saw sales grow by 12.2% in December. It was a record year for American ‘Made in Italy’ shopping: 2016’s total was just shy of €37 billion.

Italy also experienced record sales in China (€11.09 billion between January and December), thanks to a 21% surge that month, which would seem to allay the fears that Beijing’s economy is slowing down.

The real news has to do with two of the big “sick men” for Italian exports between 2015-2016: Russia and Brazil. Moscow nearly broke even in November, and then shot up by +9.2% in December: a recovery that has helped to mitigate the annual deficit in exports to Russia (-5.3%) but, more importantly, inspires hope for a more convincing recovery in 2017. This couldn’t come soon enough, as (in comparison to 2013’s levels) Italy has lost 38% of the Russian market, a value of more than €4 billion.

The other positive surprise was Brazil, with a gain of 20 percentage points in the Mercosur area: these numbers have led many to believe that the recession has already hit its lowest point.

For ‘Made in Italy’ companies, December saw an extra €700 million coming in from non-EU markets, due mainly to sales in the United States (€382 million), China (€192 million) and Russia (€53 million). December’s “treasure chest” in the overall balance will almost certainly grow once the EU sales are in: these sales are expected to confirm the positive trend seen in recent months.

The export recovery encompasses all categories of goods. As such, non-EU consumer goods have ended 2016 with positive sales.

All import categories have also experienced recoveries over the month—particularly capital goods, which have seen purchases rise by 10.4%.

For the entire year, the non-EU trade balance has grown by €39.9 billion—€6.6 billion more than 2015—particularly due to low crude oil prices. The non-EU manufacturing balance remains almost unchanged at +€65.6 billion (from €64.4 billion), while the energy deficit has shrunk from €30.7 billion in 2015, to €25.7 billion last year.