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Successfully investing in Italy


last updated on 19 May 2021 | reading time approx. 2 minutes




How do you assess the current economic situation in Italy?

After a sharp decline in GDP of 9.9 per cent in 2020, the IMF forecasts remarkable GDP growth of 4.2 per cent in 2021 and 3.6 per cent in 2022 (in comparison, Germany’s growth forecast is at 3.6 per cent and 3.4 per cent, respectively). The continuous lockdowns and uncertainties are weighing on economic activity, although government support has mitigated the impact on businesses and households like in most other European countries. The immunisation campaign is proceeding in orderly fashion and is expected to contribute to a strong consumption stimulus within a few months. Investment and exports are expected to recover relatively rapidly. Supportive tax policy measures are increasing public debt, but interest rates are at a historic low and their outlook is stable. However, sustained higher growth rates are still needed to improve Italy’s budget in the medium term.

How would you describe the investment climate in Italy? Which sectors offer the largest potential?

As the vaccination campaign progresses, investment sentiment should rapidly improve, but a full recovery of investment is not expected before 2022. Much depends on the deployment of the 209 bio. Euro EU Recovery Fund. Italy’s share of the Fund is enormous and the country’s planned reforms are the most substantial since at least a generation. The doubts about Italy’s ability to design its future have also significantly diminished with the new Draghi government in place since early 2021. Italy's budget certainly envisages growth that is faster, greener, more digital and more inclusive than previously thought possible in Italy.  

Foreign investors can take advantage of numerous support instruments for fixed assets, digital equipment, training and research. Among the most important support measures are tax credits and interest rebates under the Nuova Sabatini Programme. In particular, the purchase of fixed assets and equipment for Industry 4.0 is subsidised, but other fixed assets, software and services are also promoted.


Industries that include food, health, medical services and technology, construction, telecommunications as well as renewable energies and the circular economy certainly offer significant potential.

What challenges do German companies face during their business ventures into Italy?

The challenges lie usually in

  • the contractual and payment arrangements,
  • the diverging legal situation in the different regions and increasingly different practical handling of commercial register processes,
  • the cumbersome nature of the institutions (courts, tax offices and other public authorities) and the associated bureaucracy,
  • the strongly unionised working environment and the insufficient efficiency of the labour market, where a positive trend can be seen,
  • and the foreign legal and tax system and the sometimes formalistic approach to tax audits.

Cultural differences and the negotiating skills of Italian business partners should not be underestimated either. Being able to operate in the national language is a decisive advantage.

A local management can mitigate not all but many of these challenges and is usually key to success.


Why should companies choose to enter/remain in the Italian market?

From a foreign perspective, the capital situation of many Italian companies offers investment opportunities last seen in the aftermath of the financial crisis. Liquidity-rich buyers with strong risk management capabilities are likely to be more active in Italy in 2021. The pandemic has torn deep wounds, but on the other hand it also offers great opportunities for market entry or for market participants already in Italy to strengthen their position.

In your opinion, how will Italy develop?

The economic landscape is positive about the “technical” government under the new Prime Minister Mario Draghi. A targeted use of the Recovery Fund to further promote the digital and green transformation, modernise and de-bureaucratise the administration and improve infrastructures represents an opportunity for all market participants to emerge stronger overall from the health crisis.


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Stefan Brandes


+39 02 6328 841
+39 02 6328 8420

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Dr. Vanessa Wagner

+39 02 6328 841
+39 02 6328 8420

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