Italian Industry Faces Challenges Amidst German Economic Crisis
The Italian industrial sector is grappling with significant challenges as its largest customer, Germany, faces a downturn. In 2023, Italy exported approximately 20 billion euros worth of goods to Germany, making Lombardy the most economically dependent region on the German market. However, recent reports from Confindustria indicate a concerning trend: exports to Germany dropped by 8.4% in 2023 and continued to decline by 6% in the first half of 2024. This downturn is not limited to metallurgy; nearly all sectors in Lombardy are experiencing reduced sales, highlighting the widespread impact of Germany's economic struggles.
In Brescia, Lombardy's industrial heart, the crisis is particularly acute. Tiberio Assisi, who leads a circular economy foundry producing metal scrap and recycled aluminum, noted that many of his 100 customers are major German automotive firms. The ripple effects of Germany's economic woes are evident, as these companies scale back their orders, directly affecting Italian suppliers.
Germany's Labor Market Stagnates Amid Economic Uncertainty
Simultaneously, Germany's labor market is showing signs of stagnation, with minimal job creation reported in the third quarter of 2024. According to the Federal Statistical Office, employment levels remained nearly unchanged, with only 23,000 new jobs added, marking a significant slowdown. Adjusted figures indicate a decrease of 45,000 jobs, the first decline since early 2021. The service sector saw slight growth, but the industrial sector suffered a loss of 73,000 jobs, and the construction industry faced a 1.1% decline in employment.
The economic climate has also deterred individuals from pursuing self-employment, with new business registrations falling by 0.9% in the first nine months of 2024. The rise in interest rates and a challenging economic environment have made entrepreneurship less appealing, particularly for small businesses, which saw a staggering 25.4% drop in new registrations. The Ifo Institute's survey revealed that 7.3% of companies now feel their existence is threatened, a notable increase from previous years. This growing concern is attributed to a combination of declining orders and heightened international competition, leading to an anticipated rise in corporate insolvencies.
The interconnectedness of the Italian and German economies underscores the broader implications of Germany's economic challenges, affecting not only local industries but also the labor market and entrepreneurial spirit.
