News Analysis: Investments needed to boost Italian manufacturing recovery

The potential of Italian manufacturing, for which a recovery has been announced, can be enhanced by reawakened investments, according to local experts.

The two recessions that have occurred in the last seven years have left a legacy of structural damages to the manufacturing industry, a study published by the Bologna-based think tank Nomisma earlier this week said.

Nomisma estimated that the potential of Italian manufacturing production, or what is obtained when production capacity is fully utilized, contracted by 18 percent between 2007 and 2014.

Between 2008 and 2012 the number of manufacturing firms fell by 2.4 percent, but despite the substantial decrease also in the number of exporters, the foreign sales of Italian manufacturing still grew by 2.3 percent in the same period.

In this scenario, a sector that is renovated and made more efficient would be ready to ride into the recovery phase as soon as it occurs, Nomisma Chief Economist Sergio De Nardis noted.

At the same time, it is all the more necessary to "try to reconstitute that part of the production potential that did not deserve to be eliminated and which may be recovered in an expansionary environment," he added.

This is possible, De Nardis said, provided that the stagnation phase is overcome, that there is a recovery path and, especially, that investments to reconstruct the production base are reawakened.

Giorgio Prodi, a member of Nomisma Scientific Committee and an economics professor at the University of Ferrara, said Chinese investments have helped some Italian companies remain in business or re-launch in the market.

In his view, the flow of Chinese investments into Italy can also open up access to China for Italian manufacturing companies. Endit