A better performance by consumer electronics, chemicals and food in Italy

According to the Italian Statistics Office Istat, Italys GDP rose 0.5% in Q1 of 2010 on the previous quarter and 0.6% year-on-year, thanks to GDP gains in agriculture, industry and the services sectors. The calendar-adjusted industrial production index increased 3.1% year-on-year, with a 6.4% increase recorded for March. Despite this positive news, Italys public debt is increasingly an issue, as it continues to rise [3.1% year-on-year in March 2010]. This is sure to increase further in the course of the year, as Italy is due to contribute 18.4% to the euro zones bailout loan for debt-ridden Greece. Based on the current trend, Istat expects GDP to grow 0.6% in 2010, while the International Monetary Fund and the EU forecast a 0.8% increase.

Sector performance in the first three months of 2010

In Consumer electronics, turnover increased 2% year-on-year in Q1 of 2010, with very good sales performance in office equipment [10.8%] and audio and videos [6.9%]. That said, information technology turnover decreased 2.4%, mobile phones 2.3%, and photography 10.9%.

Clothing manufacturing confirmed the negative trend of the last two years, with turnover decreasing 3.5% and production declining 15% in Q1 of 2010. In 2009, turnover decreased 14.5% and production 19.8%. According to Istat, exports of clothing products decreased 10.7% and imports 11.3%, and employment in this sector continues to decline. A return to pre-crisis levels is not yet foreseeable.

In Chemical, according to Istat, the trend in orders is positive [7.4% year-on-year] with production increasing 14.5% because of buyers´ restocking after a period of low raw material purchasing. This process was accelerated by the announcement of price increases due in the forthcoming months. That means that growth in the second half of the year will be slower - for 2010, this is forecast to be around 7%, with paint and varnish 10%, plastic products 9%, and medical gas sector 7.5%. Exports of chemical products are expected to grow 4%.

Food has recorded a slight increase in production value compared to the previous quarter [up 0.6%], with positive signals coming from consumer demand. Istat reports a 3.3% sales increase in food products year-on-year. According to the food and agriculture institute ISMEA, the industry confidence index increased 2.3% in Q4 of 2009, thanks to positive expectations. After recording a negative performance in 2009, agriculture has shown slightly positive signals, with an increase in added value [3%] in Q1 of 2010 compared to the previous quarter, while prices have remained stable.

In Transport, the Italian freight forwarding market remains extremely fragmented. In 2009 transport company insolvencies increased 18% year-on-year, while payment behaviour in the sector has deteriorated.

Bank overdues have increased

In March 2010 the amount of bank lines granted to the Italian companies was 937 billion euro compared to 955 billion euro in March 2009 [down 1.8%]. Many companies still have problems obtaining loans to expand their business activities. At the same time, overdues increased 44% year-on-year, reaching the highest monthly value for the past 15 months. Currently 4.8% of bank exposure is overdue - compared to 3.6% last year.  Looking at individual sectors, construction and wholesale are receiving the largest volumes of bank finance, and both are also showing the highest amount of overdues. In terms of performance ratio [the ratio of bank financing to overdues] the worst performers in March 2010 were textiles and footwear [13%], industrial products [9%] and metals [8%]. Viewing the overdue trend over the last 12 months, we can see that metals are the worst sector, with an overdue increase of 78%, followed by industrial products with 67%. However, agriculture recorded only a 24% increase.

According to the Credito y Caución experience, Italy stands out as the country with the most negative evaluation of its domestic payment behaviour. Companies in the building and construction industry and the retail sector were judged to be the worst payers of any industries.