Risky business

How Italy is reacting to the economic downturn

Editorial Staff
April 23, 2009

Economic experts suggest that there are two ways to beat the economic crisis: close up shop or invest more into the business. Although going deeper into debt to invest more in such a tough economic climate can be perilous, recent statistics reveal that Italian businesses are willing to take that risk.



According to data from Artigiancassa, Italian artisans and craftsmen have been the most willing to re-invest, relying on credit from smaller, local banking institutions, which are more willing to grant credit than larger ones.


Many artisans in central Italy have even doubled their investments. For example, in January and February, artisan footwear firms in the Marche region increased investments by some 30 percent, compared to the same period in 2008. 


This is supported by the fact that business confidence is improving, albeit slightly. According to a poll conducted by Banca d'Italia and newspaper Il Sole 24 Ore in March, business leaders are becoming slightly more optimistic about the severity and duration of the economic crisis. The poll of 440 small and medium-sized businesses throughout Italy showed that some 63 percent of entrepreneurs believe that the economy will remain stagnant or worsen over the next three months, while some 58 percent believe that the economy would be considerably better in three years time.


Unfortunately the Italian consumer is not as optimistic. Data released by the Confcommercio reveals that consumer spending dropped further, by about 4 percent, in March 2009. This data is compared to a slight increase in spending by Italian businesses in the same period, says president of Federchimica, Giorgio Squinzi.


The Italian government is also trying to boost consumer spending. The Senate recently approved a series of anti-crisis measures, including incentives of up to 3,500 euro for consumers who purchase eco-friendly cars. The incentive, which is part of the government's push to replace old cars with cleaner, fuel-efficient models, helped increase sales slightly in March after months of falling volumes.


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