Italy suffering extreme credit crunch
Italy is suffering a extreme credit crunch, leading industrial association Confindustria reported in a study presented Wednesday.
According to the Rome-based association, the country is suffering recession, a fierce credit crunch and low profitability.
The Italian manufacturing production has slipped from 5th to 8th place in the world, overtaken by emerging economies such as India, Brazil and South Korea, and some parts of the industry are fighting to survive, the study said.
Particularly affected by the credit crunch are small businesses, which have more debt and less bargaining power with banks, it added.
However, the lack of liquidity and financing for investment projects is putting at risk many healthy companies as well.
The study reported that the export share for the fashion sector, which has always been a symbol of made in Italy, has reduced from 21.5 to 13.9% from Y's 1991 to 2011.
As a relapse into recession threatens the Italian industry, industrial policies have become crucial to strengthen the manufacturing sector, which is a motor for growth through innovation, Luca Paolazzi, head of the research center, said while presenting the study in Rome.
Yet, limitations related to inefficiencies in public administration and lack of governments with a long-term vision pose a threat to the manufacturing industry, he added.
The recent earthquakes in Emilia Romagna region, an area with strong manufacturing sectors crucial for the country's industrial development, further worsened economic prospects, Paolazzi said.
Due to the quake, it is feared there will be a production stop of at least four to six months, and I think this is quite possible, Confindustria president Giorgio Squinzi, noted.
Mr. Squinzi warned that hikes in value-added tax introduced by the current technocratic government to tackle the economic crisis were likely to trigger a further drop in consumption.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.