Major macro economic indicators
| | 2010 | 2011 | 2012(e) | 2013(f) |
|
GDP growth (%)
|
1.7 |
0.4
|
-2.4
|
-1.4
|
|
Inflation (yearly average) (%)
|
1.6
|
2.9
|
3.3
|
2.0
|
|
Budget balance (% GDP)
|
-4.5
|
-3.8
|
-3.0
|
-2.9
|
|
Current account balance (% GDP)
|
-3.5
|
-3.3
|
-0.6
|
-0.1
|
|
Public debt (% GDP)
|
118.7
|
120.1
|
127.0
|
130.0
|
| |
| (e) Estimate (f) Forecast |
- Relatively important role of industry and stability of family businesses
- Up-market move of production and highly profitable niche products (luxury clothes, household equipment, food products, mechanical engineering)
- Low household debt and high savings capacity
- Wealth of tourism assets
- High national debt, tax evasion
- Price rigidity, falling productivity in recent years
- Inadequacy of research and higher education
- Backwardness of the south
Risk assessment
Recession continuing in 2013
After a sharp contraction of activity in 2012, driven by the fall in private consumption, which represents 61% of GDP, 2013 will be marked by a further recession. The labour market deteriorated at one of the fastest rates in the country’s history, with unemployment potentially approaching 12% in 2013. Household disposable income shrank by 4% in real terms in 2012 and, with persistent inflation despite the recession, it is expected to fall again in 2013. Public demand will also contract though more slowly. Only external trade will once again make a positive contribution to economic activity. This will, however, not compensate for the unfavourable trend of domestic demand. In 2012, imports largely explain the adjustment of the current account balance. This is likely to be less true in 2013, due to a less marked decline in imports and a slow recovery in exports.
Businesses still in difficulty
Business investment is also expected to contract: margins are returning to 2009 levels and profitability and cash flow are shrinking. Moreover, the eurozone absorbs 44% of Italian sales and sluggish European demand will limit the rebound of sales abroad. Furthermore, there is no real downward trend in unit labour cost, which will not help the economy to regain ground in terms of competitiveness. Manufacturing accounts for over 81% of exports and 57% of these are of machines, transport equipment and chemical products which could, however, benefit from emerging country demand. Businesses, moreover, face a contraction in the supply of credit all the more difficult to cope with since, until early 2012, the banks had remained rather generous. Consequently, risk will remain high, as was shown by the sharp rise in payment incidents recorded by Coface in 2012. Metals (because of the weakness of car sales and the fall in housing construction), food processing and construction will remain high-risk sectors. Luxury goods and chemicals are expected to be more resilient.
A drive for reform but political uncertainties
The President of the Council, Mario Monti, embarked on a policy of structural reform which, while difficult in the short term to translate into a strengthening of the economy, is expected to improve growth potential. After the pensions reform, the major focus has been on liberalising the labour market (law adopted in the summer of 2012, among other things making the use of part-time work more flexible) and the market for goods and services (opening-up of closed professions). However, the political stalemate resulting from the general elections of 24 and 25 February 2013 is a threat to the pursuit of reforms and clouds the horizon of the economic actors. As no individual enjoyed the majority support of both houses of parliament, President Napolitano appointed two working groups to formulate a minimum common programme so as to provide the country with a new government. If this latest attempt at forming a government fails, Italians will again be called to the pools.
Public debt: a sword of Damocles
The economy is still hampered by very high public debt which the strict fiscal policy will not succeed in reducing in 2013. The country’s solvency remains vulnerable to an interest rate shock. The rise in non performing loans in the banking sector, a deepening of the political crisis or an external shock from Greece or Spain are among the many risks which could again put pressure on public finances in 2013. The potential for a sovereign accident is however now more remote thanks to commitment of the president of the ECB, realised through new possibilities of sovereign debt buyback (without ex-ante quantitative limits) but subject to the adoption of a programme overseen by the “troika”, a scenario which the Italian authorities will do everything possible to avoid.
MEANS OF PAYMENT AND COLLECTION METHODS
Trade notes (cambiali) are available in the form of bills of exchange or promissory notes. “Cambiali” must be duly accepted by the drawee and stamped locally at 12/1000 of their value or at 6/1000 if stamped beforehand abroad. In case of default, they constitute de facto enforcement orders as the courts automatically admit them as a writ of execution (ezecuzione forzata) against the debtor.
Signed bills of exchange are a fairly secure means of payment but are rarely used on account of the high stamp duty, the somewhat lengthy cashing period and the drawee’s fear of damage to his reputation caused by the recording and publication of protested unpaid bills at the Chambers of Commerce.
Since the rules on cheque amounts were relaxed in April 1990, payment by cheque has become commonplace. Besides the date and place of issue, cheques established in amounts exceeding 5,000 EUR and intended to circulate abroad must bear the endorsement non trasferibile (not transferable) since they can only be cashed by the beneficiary.
To make the use of cheques more secure and efficient, the new banking provisions reaffirm that, since 1st September 2006, any bank or postal cheque issued without authorisation or with insufficient funds will subject the cheque drawer to administrative penalties and listing by the CAI (Centrale d’Allarme Interbancaria), which automatically results in exclusion from the payment system for at least six months.
Bank vouchers (ricevuta bancaria) are not a means of payment, but merely a notice of bank domicile drawn up by the creditor and submitted by him to his own bank for presentation to the debtor’s bank for the purposes of payment (the vouchers are also available in electronic form, in which case they are known as “RI.BA elettronica”). Courts may accept bank vouchers, if signed by the buyer, as acknowledgement of debt. However, they do not have the force of a writ of execution.
Bank transfers are widely used (90 per cent of payments from Italy are made by bank transfer), and in particular SWIFT transfers, as they considerably reduce the period of processing. The bank transfer is a cheap and secure means of payment once the contracting parties have established mutual trust.
As elsewhere, an out-of-court settlement is always preferable to legal action. Demands and telephone dunning are quite effective, as are on-site visits that provide an opportunity to restore dialogue between supplier and customer, and so to conclude a settlement.
Settlement negotiations focus on payment of the principal, plus any contractual default interest as may be provided for in writing and accepted by the buyer.
Where there is no such agreement, the rate applicable to commercial agreements concluded after 8 August 2002 (Decree-Law of 9 October 2002) is the six-monthly rate set by the Ministry of Economic Affairs and Finance by reference to the European Central Bank’s refinancing rate, raised by 7 percentage points.
Failing an out-of-court settlement with the customer, the type of legal action taken will depend on the type of documents justifying the claim.
Based on “cambiali notes” – bills of exchange, promissory notes – or cheques, creditors may proceed directly with forced execution beginning with a demand for payment (atto di precetto) served by a bailiff preliminary to attachment of the debtor's moveable and immoveable property barring receipt of actual payment within the allotted time.
The resulting auction proceeds will be used to discharge outstanding claims.
Creditors can obtain an injunction to pay (decreto ingiuntivo) via a fast-track procedure if they can produce, besides copies of invoices, written proof of the claim’s existence by whatever means.
The injunction issued by the court will also specify the amount of legal costs, according to an established schedule, payable by the debtor. A forty-day period is granted to the defendant to lodge an objection.
Since 4 July 2009, ordinary summary proceedings are introduced (procedimento sommario di cognizione) for no complicated disputes which can be settled upon simple presentation of evidence. Sitting with a single judge, the court determines a hearing for appearance of the parties, and delivers an provisionally executory ruling if it acknowledges the merits of the claim ; the debtor however has 30 days to lodge an appeal.
Lacking the requisite supporting documents or in case of objection to the “decreto ingiuntivo”, a creditor must take ordinary legal action to establish his right to payment, a process still considered slow despite several reforms of the civil procedure. Such lawsuit can take up to two years, although the applicant may obtain, during that period, a provisional payment order equivalent to a writ of execution.
Recent amendments to the civil procedure code, effective since March 2006 and July 2009, are intended to speed up the pace of proceedings by reducing the procedural terms, by imposing strict time limits on the parties for submitting evidence and making their cases, by introducing written depositions in addition to oral depositions.
