ROME: Italian exports almost reaching the break-even point with Russia (-0.9%) in November was a very important sign—the first indicator of a possible turnaround. Moreover, this could be a good chance to try to reduce the arrears that many businesses have developed over the past few years. After the 2009 shock, Italian exports towards Russia were finally able to pick back up and exceed pre-crisis levels in 2013. This illusion only lasted for a brief period, as the very next year this trend regressed dramatically. After analyzing three years of stagnation, more than €4 billion in exports have gone up in smoke. This is distributed (though not uniformly) among all manufacturing sectors. However, in reality, the negative effects were concentrated on a handful of products.
The direct effect, though drastic for the sectors involved (processed meat is down -78% between 2013 and 2016, -96% for the dairy industry), is greatly exceeded by other background variables: problems with financial transactions, falling crude oil prices that caused the ruble to collapse (thus diminishing local purchasing power), and tensions with Ukraine that drove investors and businesses away from the country. This had a dramatic effect on Italian exports, particularly capital goods and components. The machine tools market and various other factory subcategories are down 50% since 2013, with bigger losses for products like cisterns and tanks (-64%), iron/steelworking products (-74%), and construction materials (-54%).
Consumer goods were similarly hindered, with a heavy impact on certain Italian industrial clusters. For example, furniture sales were down by 40% between 2013 and 2016 (a sector comparison is possible over the first nine months of the year); in terms of absolute value, this equates to a loss of €200 million. It’s a similar situation for the footwear sector: a -51.8% free fall, equaling €280 million in lost sales. The automotive sector performed even worse, though in this case Russia had never posted strong numbers overall. Thus, an already-feeble market has been practically wiped out, down -80% (€216 million) in comparison to 2013. Damage to these sectors can also be seen from a geographic standpoint. Exports to Russia from Chieti (the province where commercial vehicle maker Sevel is based) are uncoincidentally down -80%, just like the drops seen in Russian exports from Fermo (-54% due to the footwear collapse); Pesaro and Urbino (-55% “thanks” to furniture); Rimini (clothing); and Forlì-Cesena (once again, footwear). Few provinces have bucked this trend (around twenty in total, none of which are major areas for Italian exports), and that’s only due to extraordinary, one-time sales. For example, a single ship from Trieste managed to raise the province’s exports to Russia (over the three-year period) by 425%.
