Import and export in Italy make up a significant part of the country’s GDP. As the 3rd largest economy in Europe and a key player in the export market, the country experienced damning destruction to its global supply chain. After being significantly affected by the coronavirus pandemic, Italy initiated a total lockdown that brought about devastation to what was already a struggling economy. Italy now faces a technical recession partially brought about by the effects of COVID-19. The shutdown led to the closure of businesses, with Reuters predicting an economic shrink of about 10%.
After Italy became the epicentre of the pandemic in Europe, many export partners requested for ”corona virus-free” certificate on all exported food items. The request received backlash from food and wine suppliers. The food and wine industry account for 50% of the export industry in Italy. However, this request did not follow through, as Italian officials and the EU stated that companies instigating the request would be penalised.
One of the most notable effects on trade is Italy’s trade deal with Turkey. More than 1,500 Italian companies are currently operating in Turkey. These include the production and distribution of machinery, electronic devices and metals. The spread of the virus resulted in the slowing of production and in some cases, a complete stop. According to Mediterranean Exporters’ Associations said the cancellation of orders by Turkish companies could amount to 50-60% by June.
The Flow of Import and Export in Italy
While many businesses completely shut their doors for more than two months, companies involved in the production of essential goods remained open. The export and import market became the driving force of Italy’s economy during the lockdown. The government noted the importance of the continual circulation of food, clothing, machinery, and pharmaceuticals during this global crisis.
The EU Commission advised for the closure of land borders within the continent, leading the Italian government to restrict the movement of all non-essential goods. Items permitted to cross borders included all goods for export and import purposes. The local government authorities put health and safety measures in place to safeguard all parties involved. These include:
- Supplying truck drivers with the necessary PPE
- Reducing the capacity of workers to allow for social distancing
- Regular health screenings
- The set-up of an internal task force by DHL Global Forwarding Italy
While there’s been a constant flow in the export and imports of goods, distribution and demand have reduced. This comes as a result of airlines reducing routes and countries initiating restrictions. The decline adds to the ongoing trade tensions between the USA and China.
As the country works its way at loosening some of the imposed restrictions, many businesses will be able to resume operation. As of 4th May, factories and other manufacturing companies opened their doors for production. It may be not business as usual; however, the country is on track to restore its economy. For more information on how other European countries are managing trade, visit ‘The Effects of COVID-19 on Import and Export in Spain.’