ICE – Prometeia carry out study for the Leonardo Committee on new emerging markets for Made in Italy. Consumption, investment, infrastructure: other opportunities for Italian companies in addition to BRICS countries

Rome, 4 July 2013 – Today, as part of the 12th Forum of the Leonardo Committee, a study commissioned by the Committee from the Strategic Planning, Research and Overseas Network Office of the Italian Trade Agency (ICE) in collaboration with Prometeia was presented in Rome. Entitled Beyond BRICS. New markets for Made in Italy, the study analyses the internationalisation opportunities for Italian companies offered by 25 emerging economies, thus outlining a map of future markets that varies in terms of companies’ specialisations.

The most attractive countries forMade in Italy consumer goods include Middle Eastern economies (Saudi Arabia, the United Arab Emirates and Qatar), which are still in the early stages of industrial development and therefore dependent on overseas markets for the supply of consumer products. These countries also have growing incomes, which will ensure steady demand for high-end products.

New opportunities for Made in Italy companies will also be offered by Chile, one of the most advanced economies in South America, Mexico, which has a potentially wide-ranging market and an expanding, well-off urban population, and Malaysia, where gradual urbanisation of rural areas will significantly boost purchases of household goods. The Malaysian economy, which has proved to be particularly dynamic, is at the heart of a continuous trade integration process taking place among ASEAN economies that will open up a consumer market of around 600 million people. It would be a good strategic move for Italian companies to step up their penetration of this market, partly to grasp the still largely unrealised potential of countries where awareness of Made in Italy is growing, including Thailand, Vietnam, the Philippines (which benefits from substantial inflows of overseas remittances), and Indonesia.

The main opportunities for Italian mechanical engineering companies lie in Saudi Arabia, Asian countries where industrial development is expanding, such as Thailand, Indonesia and Malaysia, and also in South American countries where the industrialisation process is more recent, such as Mexico, Colombia and Peru. Other countries like Iran, Pakistan and Libya, despite offering promising prospects, are marked by political uncertainty and unreliable regulations, which are risks that hamper industrial infrastructure development.

Among Italy’s neighbours, Serbia, Tunisia and Morocco are the markets that offer the greatest potential for our companies in the investment goods sector.

Demographics and urbanisation determine the map of new markets in terms of available infrastructure opportunities. Asia continues to be the driving force, with Indonesia, Pakistan and Vietnam topping the ranking, followed by Thailand and the Philippines. In Latin America, the main opportunities are concentrated in Mexico, especially regarding energy and the transport network, but the presence of Italian construction companies in the country is still rather small. However, our companies are better positioned in Colombia and Peru, which offer good investment opportunities, above all in the telecommunications and energy sectors.

In highly dynamic investment markets like Saudi Arabia, the United Arab Emirates and Qatar, Italian construction companies appear to be well entrenched, and good prospects are emerging for further consolidation on the back of new orders connected with numerous infrastructure projects. In North Africa however, the wide-ranging growth potential hinges on overcoming political instability. In Libya, where Italian companies are present due to geographical proximity and historical ties, reconstruction initiatives are conditioned by political uncertainty, which is also the case in Egypt, where investment of more than 80 billion euro is estimated by 2020. Finally, according to the study, markets in sub-Saharan Africa will be the most dynamic at global level, given their low starting point. Nigeria in particular will require huge investment in civil infrastructure and power plants.

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