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Address by the Ambassador of Italy, Gianluigi Benedetti to the seminar “The EU Investment Plan ‘NextGenerationEU’ and the ECB Monetary Policy Normalization: Perspectives from Italy” organized by the Representative Office of Bank of Italy in Japan

Dear Dr. Andrea GERALI, Chief Representative at Bank of Italy in Tokyo,

Dear Dr. Rene DUIGNAN, Senior Economist at the EU Delegation to Japan,

Dear Dr. Takeshi IMATOKI, Chairman of NOMURA Italy & Branch Manager,

Dear Mr. Stefano DEL PUNTA, CFO Intesa SanPaolo,

Ladies and Gentlemen, dear guests,

Happy New Year and welcome to the Italian Institute of Culture in Tokyo!

Please allow me to thank Professor Silvana De Maio, Director of the Institute, for the kind hospitality.

I am very pleased to open this event organized by the Representative Office of Banca d’Italia in Japan to discuss “The EU Investment Plan ‘NextGenerationEU’ (NGEU) and the ECB Monetary Policy Normalization: Perspectives from Italy”.

Since we are supposed to provide today an Italian point of view on the “Next Generation EU program”, let me say clearly two things: first, the NGEU represents a great opportunity for Italy, in particular for taking its economy and its society to a new level of growth. Second: this opportunity is potentially extended to all the countries, which want to partner-up with Italian companies and research institutions and to invest in Italy in the near future, Japan in particular.

The “Next Generation EU” program and Italy’s National Plan for Recovery and Resilience” (PNRR) have become for Italy, in the last 18 months, the leading drive to revitalize and reshape our economic structure after the negative impact of the COVID-19 pandemics.

For those who are not familiar with Italy’s PNRR strategic lines, let me briefly say that our National Program, coherently with the EU strategic directives, focuses on three main areas of development: digitalization and innovation, ecological transition, social inclusion.

The first objective of Italy’s National Plan is to repair the economic and social damage caused by the pandemic crisis. Similarly to other EU countries, this is the short-term goal, substantially already achieved if we take a look at the Italian economic performance in the last 12 months.

Italy is in fact one of the top economies that recovered fast and the Italian economic outlook, according to the National Statistics Bureau (ISTAT) as well as all the global main rating agencies, is very positive.

The latest figures of the main economic fundamentals tell that Italy has grown by 3.9% in 2022, notwithstanding the energy crisis caused by the brutal Russian aggression of Ukraine. Employment rate rebound by 4.3% and inflation rate – although its increase in the last year – is under control. Moreover, in 2022 investment rate jumped by 10%.

The other objective of the plan spans on a medium term, from now and 2026, aiming at reinforcing the structural components of the Italian economy and society, by setting the country on a path of innovation, ecological and environmental transition, as well as by substantially contributing to reducing territorial, generational and gender gaps and further modernize the public administration.

In this regard, the Italian Government is committed to progressively achieving by the end of 2026 the objectives outlined with reference to six priority sectors: 1. Digitalization, Innovation, Competitiveness, Culture; 2. Green Revolution and Ecological Transition: 3. Infrastructures for Sustainable Mobility; 4. Education and Research; 5. Inclusion and Cohesion; 6. Health.

In doing so, our country can count on a mix of diversified financial tools, such as the “Recovery and Resilience Facility” (RRF), the “Recovery Assistance for Cohesion and the Territories of Europe” (REACT-EU), the “Just Transition Fund” (JTF) for regional cohesion together with “Rural Development funds”, Invest EU, RescEU and Horizon Europe.

The magnitude of the total EU funds allocated to Italy for a 5 years period (2021-2026), in addition to the national budget funds, is more than 200 billion euros, which would lead to a substantial upgrade of the Italian economic infrastructures, a more dynamic labor market and many new projects, both national and international. According to the official estimates, Italy’s GDP in 2026 is expected to be 3.6 percentage points higher and employment is projected to jump-up by 3.2 percentage points.

This leads me to talk about what I mentioned at the beginning of my intervention, when I said that “Next Generation EU program” and the Italian PNRR represent an opportunity to other world economies willing to cooperate with Italian companies and research institutions and to invest more in Italy in the near future.

Foreign investments in Italy have already recorded an incremental trend over the last decade. According to the UN Conference on Trade and Development (UNCTAD)’s World Investment Report, Italy attracted 301 greenfield foreign direct investment (FDI) projects – several of which from Japan – amounting to almost 8.4 billion euros, nearly double the number it attracted in 2020. This confirms a trend outlined by the Kearney’s FDI Confidence Index, which for 2022 ranks Italy as the 7th most attractive economy in the world.

If we combine this positive and growing trend and the potential set out by Italy’s PNRR, which foresees huge investments in a wide variety of crucial sectors that the Italian new government is strongly committed to realize, we can assume that in the near future global investors will even more positively look at Italy.

In this scenario, I believe that Japan is well positioned, considering our long-term dynamic partnership. Many Italian and Japanese companies are today directly present in Japan and Italy respectively. Our trade exchanges are solid with a level of 15 billion Euros in 2022, our academic and scientific cooperation is well rooted and growing and our cultural exchanges are at top level as we are both cultural superpowers.

Our strong political relationship, based on the sharing of common values and principles and on the common responsibilities as member of the G7 and G20 has been upgraded to a “strategic” level on the occasion of the meeting between Prime Minister Kishida and Prime Minister Meloni in Rome on January 10. Our security and defense cooperation was enhanced by the agreement to jointly develop with the United Kingdom the next generation fighter jet, a program that in the coming years will promote a better awareness of each other’s industrial capabilities, more confidence and stronger ties between our companies.

Summing up, I am sure that the implementation of Italy’s PNRR measures and programs will definitely create new opportunities for bilateral partnerships, industrial collaborations in research and development, particularly on hi-tech sectors. I therefore encourage Japanese entrepreneurs to look at Italy with an increasingly stronger business-oriented stance, since I am firmly convinced that from now until 2026 there will be plenty of room for new business opportunities.

Let me conclude by saying loud and clear that Italy is very committed to implement the PNRR. Reinforcing the economic structure and strengthening Italy’s economic competitiveness is our priority objective and our new government has already stressed its political determination to meet this challenge and turn our country in one of the most modern, digitalized and innovative economy on the global scene.