What is Corporate Welfare

Economic and Government Policies Italy June 26, 2016By: Paul Young, CPA, CGA

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This presentation is one perspective when it comes to government and economic policies for the Italy

Paul Young - Presenter

BioCPA/CGA25 years of experience in Academia, Industry and Financial solutionsYoutube Channel - https://www.youtube.com/channel/UCAArky1bAXPSuV2NLtUnyLg

AgendaGDP GrowthTradeCanada and Italy TradeGDP / SectorDebt to GDPDeficits/Surplus Business Taxation Banking SectorForeign Direct Investment

GDP / Growth -

Source: http://www.gbm.scotiabank.com/English/bns_econ/forecast.pdf

http://www.gbm.scotiabank.com/English/bns_econ/forecast.pdf

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Italy - GDPIn Q1 2016, GDP recorded 0.3% growth over the previous quarter in seasonally- and working-day adjusted terms, according to more detailed data released by the National Statistics Office (ISTAT) on 31 May. The reading matched the preliminary estimate and came in above the 0.2% rise tallied in Q4. In addition, the figure marked the highest reading since Q2 2015.

Private consumption remained stable at Q4s 0.3%. Government consumption decelerated from a 0.6% increase to a weaker 0.2% rise. Fixed investment growth also decreased from Q4s 0.8% to 0.2% in Q1. GDP growth received a positive impetus from higher inventories.

On the external side of the economy, exports swung from a 1.2% expansion in Q4 to a 1.5% fall in Q1, which marked the worst result since Q4 2012. Imports dropped 0.9% in Q1 (Q4: +0.9% quarter-on-quarter). As a result, the external sectors net contribution to overall growth fell from plus 0.1 percentage points in Q4 to minus 0.2 percentage points in Q1.

In annual terms, the economy grew 1.0% in Q1, which was marginally below Q4s 1.1% rise and was in line with the preliminary estimate.Panelists see the economy increasing 1.0% in 2016, which is unchanged from last months forecast. For 2017, panelists expect the economy to expand 1.2%.

http://www.focus-economics.com/countries/italy/news/gdp/gdp-growth-accelerates-slightly-in-q16

Italy / Trade

hhttp://www.worldstopexports.com

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Italy / Trade Export Partners The top export destinations of Italy areGermany($61.3B),France($49.8B),the United States($40.8B),the United Kingdom($28.1B) andSwitzerland($22.5B).

The top import origins areGermany($70.2B),France($39.5B),China($33.2B),the Netherlands($27.3B) andRussia($22.9B).

http://www.countryaah.com/France_Trade_Partners.htmlhttp://atlas.media.mit.edu/en/profile/country/ita/

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Oil - ItalyItaly imports almost all of its crude oil but the Mediterranean nation is a major center of refining activity in Europe. With a total of 17 refineries that can process more than 2 million barrels per day, Italy is the second largest refiner in Europe falling just behind Germany.Out of Italy's 17 oil refineries, 11 of them are located along the coast and have terminals that are capable of receiving tankers like the Theo T. But out of those coastal refineries, not all of them process the type of light sweet crude from the Eagle Ford.

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Canada and Italy Trade

http://www.canadainternational.gc.ca/italy-italie/bilateral_relations_bilaterales/index.aspx?lang=eng10

GDP Italy

Italy is the worlds ninth biggest economy. Its economic structure relies mainly on services and manufacturing. The services sector accounts for almost three quarters of total GDP and employs around 65% of the countrys total employed people. Within the service sector, the most important contributors are the wholesale, retail sales and transportation sectors. Industry accounts for a quarter of Italys total production and employs around 30% of the total workforce. Manufacturing is the most important sub-sector within the industry sector. The countrys manufacturing is specialized in high-quality goods and is mainly run by small- and medium-sized enterprises. Most of them are family-owned enterprises. Agriculture contributes the remaining share of total GDP and it employs around 4.0% of the total workforce.

Source: http://www.focus-economics.com/countries/italy

http://www.tradingeconomics.com/italy/gdphttp://www.istat.it/en/files/2016/06/MR_May2016.pdf?title=Monthly+report+on+Italian+economy+no.+5%2F2016+-+7+Jun+2016+-+Full+text.pdfhttp://www.focus-economics.com/countries/italy11

Debt to GDP Italy

http://www.tradingeconomics.com

France even has a favourable demographic outlook, with a birth rate just above replacement level mainly among its immigrant population. They are simply too large to fail.But Italy and France share problems of slow growth, unemployment, poor public finances and structural problems. They have found it difficult to reform and face an increasingly tough political environment.

Source:http://www.independent.co.uk/voices/france-and-italy-next-economic-crash-europe-a7054801.html

http://www.tradingeconomics.comhttp://www.independent.co.uk/voices/france-and-italy-next-economic-crash-europe-a7054801.html12

Surplus (Deficits) / GDP

There are other structural problems. In World Bank studies, Italy ranks 65th out of 189 countries for ease of doing business. Infrastructure, dating back to the immediate post World War II era, is in need of renewal and lags leading economies. Energycostsare high. Italy spends less than 5 per cent of GDP on education, compared with a 6.3 per cent average across the OECD. The proportion aged 25-34 completing higher studies is 21 per cent, compared with a 39 per cent average for the OECD

Source: http://www.independent.co.uk/voices/why-italy-s-economy-is-about-to-collapse-a7091221.html

http://www.tradingeconomics.comhttp://www.italy24.ilsole24ore.com/art/markets/2016-05-30/assemblea-bankitalia-180208.php?uuid=ADRU9aShttp://www.independent.co.uk/voices/why-italy-s-economy-is-about-to-collapse-a7091221.html

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Taxation Policies Italy

VAT 22%Corporate Tax rate 27.5%

http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-francehighlights-2016.pdfhttps://www.french-property.com/guides/france/working-in-france/starting-a-business/other-business-taxes/vat/http://taxfoundation.org/article/corporate-income-tax-rates-around-world-2015http://www.pwc.com/gx/en/tax/corporate-tax/worldwide-tax-summaries/assets/pwc-worldwide-tax-summaries-corporate-2015-16.pdfhttp://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-italyguide-2015.pdf

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Banking Sector - ItalyFitch Ratings-London/Milan-08 June 2016: The impact of Italy's reforms agenda will take time to materialise and for the medium term, pressures abound across key sectors, particularly banking and SMEs, says Fitch Ratings.

Italy's banking sector is burdened by weak asset quality and considerable fragmentation. Data provided by Datastream and Bank of Italy shows that the rising stockpile of impaired assets peaked in January 2016 but in our opinion Italian banks will need to set aside additional loan loss provisions going forward and this may force some to raise additional capital.

Italy has left it late to identify its NPL problem. Ireland and Spain, for example, were able to recapitalise their banks before mandatory bail-in under the EU's Bank Recovery and Resolution Directive was in force. The schemes now being launched in Italy face more challenges and there is a risk that they may not be able to deal with the asset quality problems effectively. In addition, the sovereign is among the most indebted in the world and the government's lack of balance-sheet headroom leaves little scope for significant growth-enhancing fiscal stimulus.

A weak SME sector lies at the heart of the banking sector's asset-quality problems and SMEs dominate the banks' NPL portfolios. New insolvency laws may encourage banks to process their NPLs more quickly but a lot depends on how easily they are able to take control of collateral - which is often tied up in a business or is the primary residence of the family which owns the business - and whether collateral values hold up.

The outcome of the October 2016 constitutional referendum will be key to determining whether reform momentum continues or stalls. To date, labour, electoral, corporate insolvency and educational reforms have been passed, but it is still too early to determine whether these reforms will significantly raise long-term GDP growth.

An overview of problems faced by Italy's sovereign, banks and SMEs is provided in a comment published today, available by clicking on the link above.

1, https://www.fitchratings.com/site/pressrelease?id=100573615

FDI - Italy

1. https://en.portal.santandertrade.com/establish-overseas/france/foreign-investment16

Italian Government

Sundays local elections in Italy are thelast critical warmup match forPrime Minister Matteo Renzi before his biggest electoral test later thisyear.Thequarter of the countrys electorate who vote this weekend will set the political tone going intoOctobers referendum on proposed constitutional changes to shrink the power and size of the Italian Senate. Renzi hasrepeatedly stated that hell quit if he loses that vote.

http://www.politico.eu/article/italy-local-elections-a-loose-loose-battle-for-prime-minister-matteo-renzi-virginia-raggi-beppe-grillo/17

Contact/other sourcesContact: paul_young_cga@Hotmail.com