The University of Wollongong has hosted a high-powered delegation of Italian corporate financial officers and accountants visiting Australia to promote Italian-made products and boost trade withg Australia.
UOW Deputy Vice-Chancellor (Global Strategy) and Professor of Economics Professor Alex Frino invited the Destination Australia delegation to UOW’s Sydney Business School campus at Circular Quay on Monday.
They were given presentation on the recent history of Italy-Australian trade, and implications for the future.
The delegation of around 60 business people was led by Dr Giovanni Parenteil who is president of the peak Italian accounting body Associazione Internazionalizzazione Commercialistied Esperti Contabili.
Professor Frino is of Italian heritage and has regular research collaborations with Italian academics and was able to address the delegation in Italian.
He told them that a major trade imbalance in favour of Italy had developed in recent years.
Italian motor vehicles, pharmaceuticals and luxury goods are the most significant Italian exports to Australia while commodities dominate Australian exports to Italy, led by fine wool, coal and duram wheat.
“Before 2012, Australians selling goods to Italy could expect to export some $A1 and $1.5 billion worth of goods. But that all changed in 2012, when exports to Italy slumped to around $A600 to $A700 million and it has never really recovered’” Prof Frino said.
“Last year, the figure was $A732 million – which is less than half the volume exported just 10 years earlier – a disaster for Australian businesses looking to Italy.
“In contrast, the pattern has been the reverse for Italians selling goods into Australia. In 2012, the purchase of goods and services by Australians from Italy started to sky-rocket and increased from less than $A5 billion to around $A6 billion. Last year, Australian imports from Italy were $6.2 billion Australian dollars – a 30-year record.”
Professor Frino said one of the biggest factors has been the exchange rate between the Australian dollar and the Euro.
“Between 2009 and 20012, the Australian dollar began to strengthen from around 60 Euro cents to a peak of 80 Euro cents. This means that goods purchased by Australia from Italy became 33 percent cheaper while goods purchased by Italians from Australia became 33 percent more expensive,” he said.
“So it is no surprise that this was the strongest period of growth of imports by Australians from Italy. It is also no surprise that exports to Italy from Australia fell dramatically.”
Professor Frino said Italian trade to Australia had remained strong despite a drop in the value of the Australian dollar since 2012.
The second significant factor was an economic recession in 2009 Italy in 2009, when the economy shrank by five percent. As a result, between 2009 and 2012 Italians essentially “stopped” buying goods from Australia.
“Furthermore, the Italian economy was in recession or teetered on the brink of recession until around 2015 when the economy started growing at a rate of around one percent and where it is at the moment,” Prof Frino said.
“Because of the weakness of the Italian economy, exports from Australia to Italy have never really recovered since 2012. There is simply not enough buying-power in Italy to spend on goods and services in Italy let alone foreign goods and services,” he said. “In contrast, the Australian economy has been strong and remains strong – with GDP growth since 2012 generally being between 2.5 and 3 percent.”
Prof Frino said predictions of continuing stronger economic growth of around three percent in Australia next year, compared to much more moderate growth forecasts for Italy, meant that the situation was unlikely to change in the near future.
He said while it was a good time for a “Made in Italy” campaign in Australia, it was not so favourable for a “Made in Australia” campaign in Italy.