Quarterly update on the Italian packaging industry as of the end of June 2014.
by Plinio Iascone

Below is a cross section of the progress of the industrial manufacturing sectors in which packaging is consumed most, divided into the macro-areas of food and non-food. To follow, the evolution of the packaging sector.
The progress of the various manufacturing sectors are gleaned from sector analyses conducted by sector associations or Prometeia.
Compared to that shown in late 2013, the business of the various manufacturing sectors shows a slight improvement of the economic situation, but it will take a long time to reach pre-crisis values.

Food industry (food and beverage)
The Italian food and beverage industry ended 2013 with a 2.3% drop, compounding the approximately 5% of the previous two years.
The decline is to a significant degree determined by a drop in domestic consumption, and the growth of exports has not managed to counterbalance the collapse of domestic consumption.
This state of affairs affects both the food and beverage areas, but production in both is expected to grow in 2014: +1.6% for beverages and +0.7% for food. This growth would be driven by exports: +3% for both beverages and food.
Domestic demand as a whole shows signs of a very modest recovery.

Pharmaceuticals
Prometeia analyses indicate 2.5% growth in 2014, following up on the slight growth of 2013 (resulting from years of progressive and satisfactory growth).
The 2013 growth was basically driven by the positive growth of exports, while domestic demand saw modest growth thanks to drugs distributed through public health services.
Also according to Prometeia, in 2014 the pharmaceutical sector will experience modest growth in comparison to the levels of previous years (+0.6%), due to the weakness of a domestic market harmed by cuts in public spending.

Fashion system
According to Prometeia, this sector’s production, during the course of 2013, continued to express a negative growth trend, which led to a 1.8% drop, compounding the decline of previous years.
This recessive situation has affected both domestic demand and exports.
In the coming years, according to Prometeia’s projections, growth should resume, driven both by exports and domestic demand.

Cosmetics and perfumes
In both 2012 and 2013, the sector managed to stave off shrinking domestic demand with the help of growing exports.
And while total production slightly increased in 2012 and slightly declined in 2013, 2014 projections look toward a recovery driven by exports, but also the beginnings of a recovery of domestic demand.

Furniture and decor
This sector has been in crisis since 2010, and production dropped approximately 19% during the 2011-2013 three year period.
This decline was caused both by the crisis of domestic demand and by exports in progressive decline; imports have also dwindled in recent years.
2014 is considered the year in which things could change, driven both by exports and domestic demand, but there is still a long way to go before any return to pre-crisis levels.

Chemical products    
According to Federchimica, the Italian chemical sector ended 2013 with a 2.2% drop in production, with 1.3% growth to exports, imports down 2% and domestic demand down 3.5%.
The long road of progressive recovery should begin in mid-2014: +2.9% production, +4.5% exports, +1.5% imports and +1% domestic demand (growth trends refer to quantities of chemical products).

Mechanical engineering
According to Prometeia, in 2013 the sector ended the year with a further decline over that of 2012.
In particular, 2013 saw -1% production, -2.9% exports and -4.7% domestic demand.
2014 is expected to see a slow recovery. Helped by the incentives of the “new Sabatini” law and investments for Expo 2015, domestic demand should grow 2.9%. Foreign trading should also recovery: +2.2% exports and +3.9% imports.
Domestic consumption is expected to grow by 2.9%.

Electric home appliances
Thanks to the slight recovery of this sector in the fourth quarter, 2013 ended with a 1.4% growth in production, sustained by exports. And in 2014, according to Prometeia, growth should continue, albeit more modestly with 1%; on the other hand, domestic demand should grow by 1.3%, mainly thanks to imports, which are expected to grow by +3.4%, and this value is expected to increase (which will significantly inhibit production growth).

Construction materials
The long recession of the construction industry continues. In 2013, the sector experienced a 5.8% drop in business, which affected all related sectors: cement, concrete, bricks, rebars for reinforced concrete, etc. In the last five years, production of construction materials has gone down 24%, and before that the trend was not satisfactory either. From 2014, according to Prometeia analyses, construction (and then construction materials) is expected to gradually recover with +0.3% in 2014, +1.4% in 2015 and an average yearly growth rate of +1.2% in the three-year period of 2016-18.

General economic situation
A recent analysis by Confindustria highlights the troubled situation of the Italian manufacturing industry: two violent recessions between 2008 and 2012 have caused large and prolonged shrinkage in output, bringing under a significant number of concerns, production divisions and job positions.
While in the first quarter of 2013 GDP was 8.6% lower than its peak before the crisis in 2007, industrial production shrank by 15%! The crisis seems to have already devastated 15% of Italy’s manufacturing potential.
Particularly negative looks the rate of consumption by families: the recession which began in the third quarter of 2011 brought 2013 to a close with 6.6% shrinkage.
 Any reversal in trends to the current recessive cycle of domestic consumption is expected to take a long time due to the high number of unemployed. For the moment, any recovery is dependent on exports. In any case, Confindustria also foresees a slow recovery during the course of 2014.
Italy’s GDP is estimated to have ended 2013 with -1.7% growth; for 2014, a trend reversal is expected to bring 0.7% growth, but in the face of approximately 8% average shrinkage from 2008 to 2013.

Expectations for Europe in 2014 are oriented toward a slow but progressive recovery, whose first signs are focused for the moment only in Germany, France and Spain.
According to Prometeia, during 2013, Italian manufacturing has continued to suffer the consequences of reduced domestic demand (-3.8%), which has contributed decisively to the sustained drop in production (an overall slowdown of 3.5% at constant prices, following 6.5% shrinkage in 2012). Exports recovered slightly (+0.3%), while imports shrunk by 2.5%.
For 2014, Prometeia foresees a slow but sustained recovery driven mainly by exports, which should raise manufacturing output by 1.7%. However, this is still far from pre-crisis values, since manufacturing shrunk by 10% from 2011 to 2013.
The chances of a firm footing for a recovery during 2014 will not however be up to concerns, since more political stability, a balanced public budget and progressive freeing up of credit will be essential.                                                     

NOTA
The data used to make this report are from the database of Istituto Italiano Imballaggio.Istituto Italiano Imballaggio.

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