B2B eCommerce

Why Italy is poised for more B2B ecommerce

Food. Art. Architecture. Culture. Only Italy and a few other countries have made such a global impact in many areas. And that includes B2B ecommerce, says Alibaba.

Aside from culture and art, Italy is also a leading country for business and ranks as one of the largest economies in the EU. Although Italy was slow to recover after the 2008 economic crisis, the country is steadily improving and has even become one of the most welcoming countries for foreign investment.

In this post, we discuss everything you need to know about Italy’s economic prospects, export market, and opportunities for entrepreneurs

Italy’s economy is among the best in Europe. The country is slowly recovering from the COVID-19 crisis while setting measures to reduce the effect of the current rising energy costs. Here are some things you should know about Italy’s current economic situation:

1. GDP growth

Italy is the second-largest manufacturing economy in Europe and the third-largest in the EuroZone. Also, the country ranks number 12 in the EU for per capita GDP, and with its current gross domestic product (GDP) of $1.886 trillion, it is the eighth-largest economy in the world. In 2020, Italy was number 8 in GDP in US dollars and number 19 in the most complex economy according to the Economic Complexity Index (ECI).

2. International trade

International trade is essential for the recovery of Italy’s economy. For this reason, the country focuses on producing high-quality goods like textiles and machinery for exports. Also, Italy lacks natural resources, so the country often imports petroleum, energy, and manufacturing needs.

International trade in Italy has significantly improved over the years, especially since it joined the EuroZone. Italy’s main trading countries are around the Euro area due to its proximity, with the major partners being Germany, France, and Switzerland. Other countries include the United States, the UK, China, and Switzerland.

3. Import & export revenue

Italy generates a lot of revenue from exporting to other countries, with the top exports being pharmaceuticals at $26.7 billion, Vehicles at $14.8 billion, Motor parts and accessories at $12.5 billion, and refined petroleum at $7.75 billion.

With imports, Italy’s top imports include petroleum, cars, pharmaceuticals, and gold. Petroleum accounts for the major import due to the country’s lack of natural resources. Another major import in the country is food, as only a small fraction of Italy is suitable for agricultural practices.

4. Industrialization

Italy is divided into a highly-industrialized area where about 75% of the nation’s wealth is generated and a less-developed region where the focus is agriculture. The service sector includes wholesale, retail, and transportation, contributing to the country’s highest revenue.

Italy’s economic prospects in 2023

Italy’s economy improved well post-pandemic, all thanks to the lifting of lockdown restrictions and reopening the economy. However, with the high energy costs, Italy’s economy, like other countries, is forecasted to weaken in 2023. Economic recovery isn’t expected until the second half of the year as the impact of rising energy costs is set to take the upper hand in 2023.

Here are some things you should expect from Italy’s economy in 2023:

  • GDP growthIn 2021, Italy’s economy grew by 6.6%, while real GDP is projected at 3.7% in 2022 before slowing to 0.2% in 2023. Also, Italy slashed 2023’s economic growth forecast to 0.6% from the previous target of 2.4%. This is mainly due to the energy crisis and the poor global economic outlook. However, the Italian government is confident that the substantial revenues generated by the country will improve public finances.
  • Improvement in manufacturing technologies and R&DItaly is famous for investing a lot in Research and Development; the country spends more than €25 billion per year on R&D and is the fourth-highest R&D investment in Europe.Also, to support trade and increase public revenue, the country is putting more effort into improving transportation and manufacturing infrastructure.Italy is one of the five countries with an export trade surplus, so the country will continue investing in advanced manufacturing technologies, especially now that the economy is forecasted to dip.
  • Improved business environment and entrepreneurial activitiesItaly’s economic recovery and supportive business environment will surely increase the number of businesses and entrepreneurial activities in the coming years. Also, its strategic location makes it a great spot to start a business or conduct trade across Europe, Northern Africa, and the Middle East.Investors should expect to find a large pool of experts and suppliers in different sectors, including industrial machinery, food products, textile, automotive, and pharmaceuticals.
  • Rising B2B e-commerce. One of the things to expect from Italy in 2023 is the rise in B2B e-commerce, as many small and medium-sized companies are expanding on different online marketplaces. Cross-border e-commerce will also skyrocket as Italians now buy about 17% of their online goods from sellers from other countries like China and the UK.Also, reports show that Italian e-commerce customers are more open to purchasing from foreign e-commerce websites. For this reason, one should expect many e-commerce marketplaces and international B2B wholesalers.
  • Rise in inflationInflation in Italy is forecasted to rise to 8.7% in 2022 and decrease to 6.6% in 2023. The increase in the inflation rate is majorly due to the rising energy costs leading to a rise in food and good prices. Also, a survey by McKinsey and Company between September and October 2022 showed that Italians are spending less to cope with inflation, price increases, and high-interest rates.

What Does This Mean For Business Owners?

If you are an entrepreneur considering starting a business in Italy, you should familiarize yourself with the country’s opportunities and challenges.

Looking ahead, the economic prospects in Italy look favorable for business owners, especially since the government is taking measures to attract FDI. In June 2021, the EU signed Italy’s Recovery and Resilience plan consisting of steps and investments the country needs to make to overcome the economic crisis by 2026.  Also, many Italian consumers are showing interest in online services/e-commerce. Therefore, now is a great time to sell to customers in Italy.

Italy’s exporting opportunities

Italy offers many exporting opportunities for foreign investors and countries. These opportunities are driven by the economic situation of the country and factors such as:

1. Favorable international trade policies

Italy relies on imports and exports to stabilize its economy, and as such, the government implemented measures and policies to foster international trade with other countries. The country welcomes investors from different parts of the world and has implemented some reforms and policies to attract and gain the trust of foreign investors. This includes forming a committee within the Ministry of Economic Development, hosting trade exhibitions of global appeal, and offering tax credits and incentives.

2. Sophisticated manufacturing base

Italy is a desirable destination for business and investment, primarily due to its advanced manufacturing base and capabilities. The country has invested a lot in advanced manufacturing technologies, thus offering a guarantee that you get high-quality goods.

Also, Italy’s strategic location at the center of the Mediterranean Sea makes it a suitable place for setting up business across the European Union, Northern Africa, and the Middle East. Italy has many airports, seaports, and strategic getaways that make moving goods and people easy. According to a report, about 432 million tons of goods and 1 billion people move through Italy’s 40 major ports and 42 airports.

3. Thriving e-commerce

Italy is currently one of Europe’s most profitable e-commerce markets as online buying & selling is projected to grow by an average of 57% a year between now and 2028. Also, the value of e-commerce is expected to rise from $47 billion in 2021 to $85 billion in 2025. One of the primary reasons behind the rapid growth of the e-commerce sector is that Italians are fast embracing online and digital services.

Also, cross-border e-commerce is rising, and almost half of Italians make online purchases from international merchants in countries like Germany, China, and the UK. This growing e-commerce sector makes Italy an attractive place to set up a store or sell across borders from your country. In addition, a survey ranked Italy as one of the best markets in Europe for cross-border e-commerce.

As e-commerce continues to grow in popularity in the country, e-commerce businesses now have the potential to thrive better than before.

4. Improved infrastructure network

As part of the measures to improve the country’s economy and exporting opportunities, Italy is investing €100 billion to improve the infrastructure network. This includes upgrading and building new railways, ports, airports, and ship transport.

5. Diverse trading partners

Italy trades with many countries, with the top destinations being Germany, France, the UK, the United States, and China. Entrepreneurs can also access an extensive network of intermediate suppliers in various sectors, including industrial machinery, metals, chemicals, plastics, paper, ceramics, textile, and marine industries.

5 popular Italian exports in 2023

Italy’s manufacturing industry focuses on producing high-quality and luxury goods, which are often exported to other countries. 58% of Italy’s trading partners are European Union countries like Germany, France, and Spain. The country’s most popular exports over the years are machinery and equipment, which account for 24% of the total exports.

Some of the top Italy exports in 2023 include:

1. Technology machinery

The most popular exports in Italy are technology-focused, with machinery and computers making up over 18% of the total export value.

2. Vehicles and automotive

The second most popular Italy export is vehicles, making up 7.4% of total exports with a value of $45.4 billion. Italy is known for high-level designs with impressive manufacturing facilities, and they are also a leading producer of helicopters and other automotive parts.

3. Pharmaceuticals and medication mix

Pharmaceutical products make up about 6% of the total exports in the country and $35.9 billion in revenue.

4. Fashion and clothing

Italy is home to some of the biggest fashion brands and accounts for 35% of European fashion production. The country is a major exporter of fashion items, especially clothing accounts for 11% of the country’s total exports.16 Other valuable fashion items the country exports include handbags, wallets, and footwear.

5. Plastic

Another primary export product in Italy is plastic. In 2020, the country exported about $20.3 billion in plastic products.

Other major export goods by the country include:19

  • Iron and steel
  • Petroleum and mineral fuel
  • Furniture
  • Jewelry
  • Industrial machinery.

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