Monday September 26, 2022

The ever-growing Pakistan-Italy economic ties

As we celebrate Pakistan’s 75th anniversary, with pleasure I share that Pakistan and Italy cordial and cooperative relations are at a historic high.

Pakistan and Italy relations have fostered fast-growing cooperation in diverse areas, including trade and investment. The 200,000-strong Pakistani diaspora in Italy is also an important manifestation of the eternal bonds of friendship between the two countries.

During the just concluded financial year, 2021-22, bilateral commercial relations have achieved many new milestones.

Posting record growth, Pakistan’s earnings from Italy in exports and remittances crossed $ 2 billion during the year. While a substantial growth in foreign direct investment (FDI) from Italy was also witnessed. Italy became a “billion dollar” export market for Pakistan for the first time ever, depicting the highest growth. On the other side, Italy emerged as a leading supplier of textile and leather machinery to Pakistan.

Exports to Italy of $ 1.15 billion in the financial year 2021-22 are 46 per cent higher than the previous year, while the remittances of $ 857 million are 41 per cent higher than last year.

Pakistan posted a record surplus of $ 573 million in trade with Italy during the financial year 2021-22, which was 91 per cent higher than the previous year.

Value-added sectors were the main drivers of this exceptional growth with exports of plastic products increasing by 208 per cent; sports goods by 80 per cent; leather by 42 per cent; home textiles by 36 per cent and garments by 35 per cent.

While the pandemic hit the global footwear market witnessed a demand contraction during the year, Pakistan’s exports of footwear to Italy increased by 19 per cent making Italy the third largest export destination for Pakistani footwear. Italy is also the fifth largest destination for Pakistani home textiles and the sixth largest in garments exports. In the area of agro-products, Pakistan is the largest exporter of rice to Italy, particularly in the Basmati sub-sector, where Pakistan now enjoys an 82 per cent share of the Italian market.

During the last financial year, Pakistan received Italian investment in the sectors of food processing, chemicals, construction, leather, footwear, energy-related equipment and IT.

With the record increase in remittances during the last three years, Italy has become the largest contributor to this financial sector within the European Union. In 2021-22, around 25 per cent of the total Pakistani workers’ remittances from the EU came only from Italy.

In the wake of Brexit, Italy is home to the largest Pakistani diaspora in the European Union (EU).

Pakistan and Italy are also working on a labour agreement that will allow Pakistan comprehensive market access to the Italian labour market. Pakistan has shared a draft agreement with the Italian authorities and formal negotiations are likely to commence soon.

Pakistan has been re-included in the Italian Seasonal Work Visa since 2021. Italy is expected to allow 69,700 seasonal workers from select countries in 2022 to come to Italy for work.

Pakistan and Italy support the trade liberalization agenda at World Trade Organization and oppose unilateralism. Within the European Union, Italy has been an ardent supporter of Pakistan for its candidature and continuation of trade concessions under the GSP Plus scheme.

Pakistan Embassy in Italy and Italian Embassy in Islamabad have been duly supporting the dynamic initiatives of our entrepreneurs to deepen their engagement with Italian businesses. I hope this momentum would gather pace and translate into enhanced economic engagement in the coming years between two great friends.