Italy is the 8th largest economy in the world and the 3rd largest in the Eurozone. Italy has a diversified industrial economy, which is divided into a developed industrial north, dominated by private companies, and a less-developed, welfare-dependent, agricultural south, with high unemployment. The Italian economy is driven in large part by the manufacturing of high-quality consumer goods produced by small and medium-sized enterprises, many of them family owned. Italy also has a sizable underground economy, which by some estimates accounts for as much as 15% of GDP. These activities are most common within the agriculture, construction, and service sectors. Italy has moved slowly on implementing needed structural reforms, such as reducing graft, overhauling costly entitlement programmes, and increasing employment opportunities for young workers, particularly women.

Historical economic stability allows Italy today to rank as one of the highest economies in terms of net wealth per capita and per household, confirmed by its low level of private debt and average financial liabilities. Italian families show a very high level of net wealth mainly held in non-financial assets and real estate. Family savings are traditionally high and liabilities relatively low (mainly mortgages). Beyond this sound household system, Italy remains a dynamic economy, with a diversified manufacturing sector that is significantly export oriented and highly specialized. It is the country of “economic districts” and several of these local areas provide a fertile environment for SMEs and start-ups. The 138 main industrial districts accounted for, in 2010 included, 285,000 firms employing 1.5 million workers and commanding EUR 74.6 billion (close to USD 100 billion) in exports. Such districts, overall, represent around 1/3 of the whole Italian manufacturing sector.

Italy has a mature economy but also strong potential for innovation and development. Italian brands are amongst the most renowned in the world; but it is also a country of technology and research, with 31 scientific and technology parks, and aerospace, biotech, IT, and pharmaceutical industries. Contrary to common knowledge, Italian manufacturing is quite sophisticated and advanced in more areas than just fashion. The fashion industry and its associated areas (textiles, tiles, etc.) represent only 10 to 12 percent of Italian manufacturing in terms of total sales, whilst around 30 percent is in marble, machinery, electrical equipment and related areas and around 6 percent is in high tech. Italy is not just a country for small enterprises. It accounts for important multinational corporations, such as the oil giant ENI, the worldwide mechanical group FIAT, and two of Europe’s largest multinational banks (Intesa and Unicredit). Large utility groups (ENEL and Telecom Italia) own significant foreign utilities.

Pakistan needs to maintain strong relations with Italy. Active engagement of the businessmen and diplomatic missions of the two countries, frequent exchange of economic and trade delegations to identify the areas of mutual interest and joint trade shows can help achieving the required goals. Keeping in view the market potential of the two countries, a lot of progress could be made on trade front through boosting up the existing trade and identification of new tradable items between the two countries. To cater to the requirements of Pakistani market, marble, chemicals, dairy products, electronic equipments, machinery, automobiles can be exported by Italy, whereas Pakistan has a competitive advantage in textile, surgical instruments, leather products, sports goods, some fruits & vegetables, rice etc., which can be exported to Italy on a larger scale.

Pakistan cannot afford to waste more time as economic challenges are already becoming a monster that can be go wild if corrective measures are not taken right now. Italy alone can play a progressive role in economic stability of Pakistan therefore government should make all-out efforts for establishing exemplary relations between the two countries.

Ambassador of Italy to Pakistan Stefano PONTECORVO and Pakistani Ambassador to Italy Nadeem Riaz deserve appreciation as both these diplomats are leaving no stone unturned to boost trade and economic ties between the two countries. On behalf of the people of Pakistan, I would like to extend sincere congratulations on the occasion of Italy’s national Republic Day. I wish the people of Italy great health and many joyful moments of celebrations as well as continued well-being and prosperity.

The writer is director of Pakistan Stone Development Company.