The Italian economy is dominated by local SMEs that may not have the same capital strength as multinational corporations, but are still strong enough to invest abroad, with Hungary becoming a key target.
As underlined by figures from Banca d’Italia, Hungary has been, and apparently is set to remain, a prime target for Italian businesses willing to invest abroad. Italian FDI flows in Hungary amounted to EUR 501 million in 2015, up from a negative balance of EUR 201 mln in 2013, whereas 2015 FDI stocks made up some EUR 1.4 billion.
The southern European country is represented in Hungary by more than 2,600 companies with a total turnover of EUR 4 bln and some 26,000 employees.
That makes Italy sixth in the list of countries with most enterprises in Hungary. The plan is to energize such economic activity even further; that was the message from a recent roundtable, called “From Made in Italy to Made With Italy”, hosted by the Italian Chamber of Commerce in Hungary (CCIU).
The event was attended by Nikoletti Antal, Deputy State Secretary at the Ministry for National Economy, representatives of the Italian Embassy, the Italian Association of Industrialists (Confindustria di Firenze), the Italian Foreign Trade Institute (ITA/ICE) and several Italian entrepreneurs active in Hungary.
The intent seems fully justified, as Italy has immense potential to solidify its economic positions in the region. We are talking about a state with the third biggest economy in Europe, and that is the eighth largest manufacturer in the world. Trade is also thriving, with 2016 having seen a surplus of EUR 51.6 bln, equivalent of 3% of GDP.
According to Dr. Marco Bulf, director of ITA/ICE, the overall outlook remains very positive, and in particular three areas should be in the spotlight in the short- and mid-term: Manufacturing; renewable energies; and logistics. Italian manufacturers already employ the most workers abroad out of all industries, totaling some 950,000, and their activity is expected to grow.
Green energy-related investments can look forward to extra growth thanks to the EU’s commitment to gradually increase the clean energy ratio in the energy mix, where Hungary can play an important role as well due to its solid geothermal and solar resources. On the other hand, Italy is perfectly positioned geographically to serve the Mediterranean, the Scandinavian-Mediterranean and the Baltic-Adriatic Corridors alike. The latter includes Budapest, which is an easy-to-reach destination in terms of logistics.
More assistance is to come from Confindustria di Firenze, among others, a territorial member of Confindustria, the largest business federation in Europe, which represents the interests of 1,046 manufacturing and service companies based in the province of Florence. The organization provides consultancy services, networking opportunities, training and information to help its member companies find their way abroad.
“The Italian economic structure is based on local SMEs, up to 90-95%, that may not have the same capital strength as multinational corporations, but the Hungarian market does not require huge enterprises,” Angelo Arcuri, international affairs manager at Confindustria Firenze said.
“Our SMEs can meet the demand of the Hungarian market; all they need to do is to operate in a targeted manner.” Arcuri further noted that labor costs are increasing in Hungary, which might prompt some capital to take a detour to places like Romania or Bulgaria instead, but that does not change the fact that Hungary will continue to be a key destination of Italian SMEs to invest.