Italy Economic Situation to Remain Favorable

The Italian economy is benefiting from the improvement in the industry sector and stronger labor market dynamics that has driven consumer and business confidence higher, the statistical office ISTAT said Friday.

In its monthly economic report, the ISTAT said the leading indicator has sustained a positive trend, suggesting favorable economic conditions in the coming months, Alliance News reported.

Foreign trade is characterized by positive dynamics for both exports and imports, the agency said. Export flows are largely driven by the EU countries, while both export and import flows with non-EU countries slowed down, the ISTAT added.

While the construction sector improved moderately, output has not recovered yet, the report said.

Employment expectations for the coming months remain optimistic, especially those for manufacturing and construction firms.

Headline inflation continued its slowdown in July, led by energy prices and costs in the transport and communication services. Core inflation slowed due to a modest increase in prices of other non-energy industrial goods, the ISTAT said.

Meanwhile, Economy Minister Pier Carlo Padoan said on Thursday that there would be clear advantages to spinning off Telecom Italia’s fixed-line network, without clarifying whether the government was planning such a move.

Rome is locked in a tussle with Paris, which has blocked Italian state-owned Fincantieri from taking a majority stake in STX France shipyards.

Earlier this year, French media group Vivendi took control of Italy’s main telecom provider Telecom Italia, or TIM, and some politicians have suggested the government should strike back at France by nationalizing TIM’s fixed-line network.

“The spin-off of the network from the supplier of services to that network is a very general issue, which is well-known,” Padoan told Sky Italia TV when asked whether a spin-off was in the offing and whether it was a good idea.

“It is a mechanism which boosts efficiency and competition and should thus be done where possible,” Padoan said, giving no further details.

TIM’s fixed-line network is estimated by some analysts to be worth up to €15 billion ($17.72 billion) and its purchase by the state has been mooted in the past.

Vivendi’s CEO Arnaud de Puyfontaine, who is also temporarily in charge of Telecom Italia, told reporters last week the idea of separating the network was “interesting”, but added it was not part of his company’s business plan.

Italian and French ministers met on Tuesday to discuss the STX France and gave themselves until Sept. 27 to find a solution, with Rome adamant that Fincantieri must take a controlling stake in STX. Paris has suggested shared ownership.