ECONOMIC RELATIONS BETWEEN ITALY AND THE MEDITERRANEAN AREA Naples, June 6, 2014 Massimo DEANDREIS Managing Director - SRM
AGENDA Trade relations with the Mediterranean Area Italian business in the Mediterranean Area Conclusions 1
Trade relations with the Med Area*: Italy is still leader but loses the primacy Trade (imports + exports) between Italy and the Med Area grew by 63.9% in the 2001-2013 period; ( 54.1 bn in 2013). As for 2012, Italy, with 61.0 bn, was first among the European countries. Italy s 2013 data were severely affected by the fall in trade with Libya (about 4 bn less, compared to 2012); mostly «energy products». bn 80 70 60 50 40 30 20 41,0 33,0 29,5 68,9 56,6 56,8 54,1 45,9 39,3 Expected values 77,4 USA 71,0 Germany 66,1 China 58,3 Italy 50,4 France 46,6 GCC 10 6,6 0 5,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015* ITALY FRANCE CHINA UNITED STATES GERMANY GCC * SRM s etimates Source: SRM elaboration on Eurostat and Unctad data 2
Med Area s share (%) on total foreign trade: Italy is largely the first country In 2001-2013 Med Area s weight on Italy s foreign trade grew from 6.2% to 7.2%. France is the second with an incidence of the Med Area of 4.8%). 9 Weight % of trade with the Med Area on total foreign trade Italy and its main competitors 8 7 6 6,2 7,2 7,2 Italy 5 4 3 2 1 0 4,3 4,8 France 4,1 2,9 3,3 GCC 2,6 2,8 2,4 Germany 2,5 2,2 USA 1,9 1,8 China 0,9 1,6 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 UNITED STATES CHINA GCC ITALY GERMANY FRANCE Source: SRM elaboration on Eurostat and Unctad data 3
Trade between Italy and the Med Area: A remarkable weight for oil and energy products Energy products make up for almost 50% of trade between Italy and the Med Area. In 2013 the weight of energy products on Italy s trade with the Med Area fell to 40.6%. It is still much higher than the one recorded for Italy s competitors. Weight % of the trade of oil and energy products on total trade with the Med Area 60 50 46,9 49.4 40 38,1 40,6 30 20 10 15,6 13,8 12,011,7 22,8 20,2 19,5 20,3 25,9 23,9 21,7 22,3 21,1 22,3 17,1 17,5 19,6 17,5 13,1 9,5 0 2010 2012 2011 2013 Italy Germany France USA China GCC 2010 2011 2012 2013 Source: SRM elaboration on Eurostat, Istat and Unctad data 4
Excluding oil Italy falls at the 6 place in the ranking Manufacturing trade between Italy and the Med Area grew by 66.3% in the 2001-2013 period, reaching 32.1 bn in 2013 (+4.0% on 2012): 20 bn less compared to Germany. bn 70 60 50 40 37,0 30 24,1 24,7 20 19,3 10 0 4,8 Total trade, «excluding energy products», with the Med Area 53,5 48,7 46,9 36,6 32,5 32,1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015* Expected values 59,3Germany 57,2 USA 58,2 China ITALY FRANCE CHINA UNITED STATES GERMANY GCC 40,0 39,2 34,7 France GCC Italy Source: SRM elaboration on Eurostat, Istat and Unctad data * Stima SRM 5
Southern Italy is the second Italian macro-region in terms of trade with the Med Area As for 2013 Southern Italy s trade with the Med Area was 13.8 bn. North-Western Italy is first ( 17.8 bn). Between 2001 and 2013 Southern Italy s trade with the Med Area grew by 24.5%. bn 25 Trade with the Med Area Italian macro-regions, 2001-2013 trend 20 15 10 5 0 12,0 11,1 6,0 3,8 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 North West 17,8 13,8 9,8 6,4 6,3 Southern Italy North East Non-specified regions Central Italy North West North East Central Italy Southern Italy Non-specified regions Source: SRM elaboration on Istat data 6
Southern Italy s foreign trade: much more oriented to the Mediterranean Med Area s weight on Southern Italy s foreign trade (14.5%) isalmosttriple compared to the other Italian macor-regions (as for North West, Med Area weight on foreign trade is only 5.8%). 18 16 14 12 10 8 6 4 2 0 5,3 Weight % of trade with the Med Area on total foreign trade Italian macro-region 5,8 5,8 4,5 Source: SRM elaboration on Istat data 5,0 5,4 5,8 4,9 5,3 10,8 15,5 North West North East Central Italy Southern Italy 2011 2012 2013 2011 2012 14,5 2013 7
Southern Italy s exports to Med countries: big prevalence of «energy products» Excluding Syria, energy products make up for almost 40% of Sothern Italy s exports to Med countries. 2.500 69,0% Sothern Italy s exports to Med countries euro million and weight of energy products, 2013 70,6% 2.000 NON-ENERGY PRODUCTS ENERGY PRODUCTS 1.500 86,8% 1.000 55,9% 55,8% 80,7% 91,0% 7,6 Mld di 500 47,6% 53,5% 0 Turkey Libya Algeria Tunisia Egypt Lebanon Israel Morocco Syria Area Med Source: SRM elaboration on Istat data 0% 8
Suez Canal: tonnes of goods and size of vessels on the rise In 2013, despite a drop in the number of transiting vessels, the Suez Canal recorded a 2% increase in goods transported, testifying to the larger size of the ships travelling on East-West routes. Number of ships (thousands) 25 20 15 10 5 800 700 600 500 400 300 200 100 Tonnes of goods (million) - 2007 2008 2009 2010 2011 2012 2013 Number of ships Of which container ships Goods 0 Source: SRM elaboration on Suez Canal Authority data, 2014 9
The new picture of port competition in the Mediterranean The ports of the South Shore of the Mediterranean increased their market share between 2005 and 2013 from 18% to 27%; the market share of Italian transhipment ports dropped from 28% to 16%. New competitors: Tanger Med (from 0 to 10%) and Port Said (from 10 to 14%). Malta 11% Cagliari 3% Pireo 12% 8% 4% 9% 0% 20% Tanger Med 10% Gioia Tauro 12% 2013 16% 2005 10% Port Said* 14% Valencia 17% 8% 4% 20% Damietta 3% Taranto 1% Algeciras 17% Source: SRM elaboration on Port Authorities data, 2013 * Port Said data are not available as for 2013 10
AGENDA Trade relations with the Mediterranean Area Italian business in the Mediterranean Area Conclusions 11
SRM s MED Observatory the «Business Project» SRM s «Business Project» is aimed at quantifying the «value» of the Italian business presence in the Med countries. Italian Business in Egypt is now in progress (publication date: September 2014) 12
Characteristics and content of the «Business Project» Microeconomic analysis Data collected on the field CHARACTERISTICS Data compared with a benchmark (Competitor country) CONTENT Analysis of bilateral economic relations with Italy Estimate of the aggregated turnover realized by Italian companies operating in the country Analysis of the balance sheets of a sample of Italian companies operating in the country CASE STUDIES of Italian companies operating in the country 13
BUSINESS ACTRACTIVITY These countries have increased their presence in international markets; they point to export and foreign investment in order to balance their foreign accounts. Jordan shows the highest level of FDI per capita and the highest % weight of FDI on GDP. FDI POSITION Total value, per capita value and % weight on GDP JORDAN: FDI Stock= $24,8 bn MOROCCO: FDI Stock = $48,2 bn TUNISIA: FDI Stock= $33,6 bn EGYPT: FDI Stock= $75,4 bn $3.837 79,4% $3.142 74,0% 49,2% $1.478 $898 29,8% Jordan Morocco Tunisia Egypt FDI per capita FDI, % on GDP Source: SRM elaboration on UNCTAD data (May 2014) 14
Strengths: DOING BUSINESS RANKING TUNISIA: trading across borders (31 ) MOROCCO: trading across borders (37 ), starting a business (39 ) JORDAN: paying taxes (35 ) EGITTO: starting a business (50 ) DOING BUSINESS RANK, 2014 THE WORLD BANK 35 51 69 87 111 119 128 153 165 187 Source: SRM elaboration on The World Bank 15
BILATERAL RELATIONS: TRADE 2000-2013 - trade with Italy on the rise; Jordan: +207.9%; Egypt:+76.2%; Morocco:+71.5%; Tunisia:+68.4%. Italy s trade balance with the 4 countries is positive. 7 6 5 4 3 2 1 Trade with Italy Trend 2000-2013; Var. % 2000-2013 TUNISIA: 5,5 bn +68,4% on 2000 EGYPT: 4,7 bn +76,2% on 2000 MOROCCO: 2,2bn +71,5% on 2000 JORDAN: 753 m +207,9% on 2000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: SRM elaboration on Eurostat data (May 2014) 16
NUMBER OF ITALIAN COMPANIES IN EGYPT, MOROCCO AND TUNISIA Egypt : almost 900 Italian companies. Tunisia: the number of Italian companies is the second highest (after French companies). Morocco: the Italian presence is less relevant. Number of Italian companies in Egypt, Tunisia and Morocco Italian Companies 2.000 1.800 1.600 1.296 1.400 France 1.200 1.000 878 635 800 800 France 600 400 200 140 0 Egypt Tunisia Morocco Source: SRM elaboration on various data 1.000 France 17
MORE ITALIAN COMPANIES IN THE TEXTILE/APPAREL AND IN THE MACHINERY AND MOTOR VEHICLES SECTORS In Tunisia and Morocco most of the Italian companies are in labour intensive sectors. Italian Manufacturing companies in Tunisia and Marocco Sectorial breakdown Textiles, Apparel Leather and Footwear Electronics Tunisia Metal products, Machinery and Motor vehicles Food and Beverage Textiles, Apparel Morocco 0% 10% 20% 30% 40% 50% 60% 70% Source: SRM elaboration on various data 18
ITALIAN COMPETITORS SHOW A GREATER BUSINESS PRESENCE IN THE CHEMICALS SECTOR As for Italian competitors, the number of companies is concentrated in the Textile/Apparel and the Machinery and Motor vehicle sectors. However, in Morocco there is a moderate presence also in the Chemicals sector. Italian Competitor s manufacturing companies in Tunisia e Marocco Sectorial breakdown Tunisia Textiles, Apparel Metal products, Machinery and Motor veh. Electronics Metal products, Machinery and Motor vehicles Electronics Chemicals and Pharmaceutics Morocco 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: SRM elaboration on various data 19
ITALIAN COMPANIES IN EGYPT, MOROCCO AND TUNISIA: MORE THAN 7 BN OF TOTAL TURNOVER Almost 50% of this aggregated turnover is realized in Egypt ( 3.4 bn); The turnover for Italian companies in Tunisia is also quite relevant (about 3 bn). As for Italian competitors, most of the turnover is generated by French companies in Morocco. Estimated turnover of Italian companies in Egypt, Morocco and Tunisia Morocco, 956,9 m Italian companies in the Area: Turnover = 7.328,0 m Egypt, 3.043,1 m Competitor's companies in the Area: Turnover = 33.761,4 m Egypt, 3.404,3 m Tunisia, 6.737,3 m Tunisia, 2.966,8 m Morocco, 23.981,0 m Source: SRM elaboration on various data 20
ITALIAN COMPANIES IN EGYPT, MOROCCO AND TUNISIA: HIGH GROWTH HIGH PROFITABILITY Turnover growth of Italian companies in Tunisia and Morocco was at least 17.1% in the period analyzed. RoE was at least 10.9% (3.0% was the value registered for companies operating in Italy). ROE % Turnover, Performance and profitability of Italian companies 40% 35% 30% 25% 20% 15% 10% 5% Egypt: 3.404 m Morocco: 957 m Tunisia: 2.967 m 0% -16% -6% 4% 14% 24% 34% 44% Operating revanue growth rate % Morocco Tunisia Egypt Source: SRM elaboration on various data 21
AGENDA Trade relations with the Mediterranean Area Italian business in the Mediterranean Area Conclusions 22
CONCLUSION Trade relations: Italy is still leader but loses the primacy A remarkable weight for oil and energy products Manufacturing trade between Italy and the Med Area grew by 66.3% in the 2001-2013 but excluding oil Italy falls at the 6 place in the ranking Southern Italy s is more oriented to the Mediterranean The ports of the South Shore of the Mediterranean increased their market share between 2005 and 2013 from 18% to 27%; Relevant number of Italian companies in Egypt, Tunisia and Morocco; Textile, machinery and motor vehicles the key sectors More than 7 Bn of total turnover for Italian companies in these countries 23