Forty-five percent of Italy’s small-sized firms are at a structural risk because of the COVID-19 pandemic, the country’s National Institute of Statistics (ISTAT) said on Wednesday.
“The persisting health crisis, as well as the uncertainty about when it might be overcome, prevents an overall assessment of the consequences (of the pandemic) on our production system,” ISTAT said in its annual report on productivity.
Still, “if exposed to an external crisis,” 45 percent of all firms with at least three employees “would suffer such consequences as to see their operability jeopardized.”
Such firms account for 20.6 percent of employment and 6.9 percent of total value-added.
“Only 11.0 percent of companies are ‘solid’ and would be marginally affected by a crisis,” ISTAT said, adding that these companies represented “by far the most significant segment of the production system in terms of both employment (46.3 percent) and value-added (68.8 percent).”
The report stated that the limitations imposed on productive activities during Italy’s lockdown from early March to early May 2020 caused an expected drop in turnover. This decline was slightly more pronounced in the services sector (down 12.1 percent) than in industry (down 11.1 percent).
“It is on the tertiary sector (services) that the pandemic had its most severe effects, and particularly on firms related to tourism, such as travel agencies, air transport, accommodation and catering, whose turnover variously fell between 40 and 75 percent,” ISTAT said.
On the positive side, the report said that Italy did not lose its competitiveness in foreign markets despite a 9.7-percent annual fall in sales abroad caused by the pandemic in 2020.
“A constant market share analysis shows that in the current situation, marked by a combination of supply and demand shocks, Italian exporters have been able to defend their positions on international markets,” it said.
ISTAT explained that Italy’s shares at the global level remained “essentially unchanged, registering slight increases in some European Union (EU) countries, in Switzerland and in China, and a decrease in the United States and the United Kingdom.”
Finally, some 25 percent of Italian companies of all sizes reacted to the pandemic crisis by investing in new products, switching to new sales and supply channels (especially e-commerce) and boosting ties with other companies, according to the survey.
Another 20 percent underwent deep reorganization, pushing hard towards digital transition and new business models, while some 30 percent were “floored” by the crisis and still had no clear strategy at the end of 2020.