Padoan sees limited impact on Italy’s economy from strong euro

A strong euro will have very litte economic impact on Italy, Economy Minister Pier Carlo Padoan said on Sunday, after the single currency hit a 2-1/2-year high against the dollar last week.

Padoan also said any solution to a row with Paris over France’s move to block the planned purchase of the STX shipyard by Fincantieri must take into account the fact that the Italian shipbuilder had originally agreed to buy two thirds of its French rival.

“The competitiveness of Italian goods goes well beyond the level of the euro/dollar exchange rate,” Padoan told Reuters at a business conference. “So I’m very confident the impact (of the strong euro) on Italy’s economy will be very limited.”

Italy’s economy has been the most sluggish in the euro zone for more than a decade, but growth has strengthened since the start of this year and its recovery looks increasingly solid.

A 1.5 percent year-on-year expansion in the second quarter was driven by firm consumer spending, investments and inventory accumulation.

Speaking on the sidelines of the Ambrosetti conference, Padoan said Italy’s economic recovery was mostly cyclical but had also a structural component that was gradually strengthening.

Padoan is set to meet French Finance Minister Bruno Le Maire on Sept. 11 to seek a compromise over the STX/Fincantieri deal.
Le Maire said on Saturday he was confident a solution would be reached ahead of a Sept. 27 Franco-Italian summit if everyone made an effort.

France has ordered a “temporary” nationalisation of STX, cancelling the deal in which state-owned Fincantieri and another Italian investor agreed to buy a 54.6 percent stake.

Paris took that decision after Fincantieri, which had initially agreed to buy 67 percent of STX from its former Korean owners, refused its proposal to accept 50-50 ownership.

“We’re very open to finding solutions that are satisfactory,” Padoan said, before adding: “Fincantieri had bought two thirds of STX from a Korean company. It would be odd … for that not be reflected in the new ownership.”

Asked about comments by former Prime Minister Silvio Berlusconi raising the possibility of a parallel currency for Italy, which hurt the country’s government bonds last month, Padoan said markets always reacted badly to destabilising proposals.

“I hope those who make such proposals think twice about their impact on the Italian government bond market,” he said.
Source: Reuters (Reporting by Valentina Za and Luca Trogni; Editing by Isla Binnie and John Stonestreet)