The tourism sector, winemakers and luxury goods producers expect a downturn as Italy backs Ukraine, The Guardian reported.
In the window of a tobacco shop in the city of Arezzo in eastern Tuscany, there is a yellow sign with a red inscription: “We only accept payment in roubles.”
“It’s just a provocation,” said Anthony Brucato, the shop owner, noting that the same window displayed the blue and yellow flag of Ukraine and a drawing of a dove with a peace flag in its beak. “I want to make people talk about what’s happening. There are a few leaders making decisions that have an impact on millions. This is crazy.”
Although Brucato said that he is critical of the Russian invasion, he admits that his showcase could be taken as showing an ambiguous message. And he is not alone.
Italy imposed sanctions on the Russian economy, stopped working with its banks and called for a negotiated settlement to the conflict. Opinion polls show that 80 to 90% of Italians support the government's position, according to research firm Opinioni.
However, the country remains heavily dependent on Russian gas imports, although Italian Prime Minister Mario Draghi has categorically refused to pay for gas in rubles.
Analysts say the lack of Russian imports of Italian goods and Russian visitors could undermine Italy's fragile economic recovery from the pandemic. At the end of March, the Economist Intelligence Unit lowered its estimates for economic growth across the EU, but noted that Italy would be hardest hit, with growth slowing to 3.4% this year from a previous estimate of 4.4% due to a hit to trade with Russia and secondary impacts such as rising fuel prices and supply chain problems. This is in line with the Italian National Statistical Institute, which said last week that further downward adjustments are possible if the war continues.
Micaela Pallini, president of the wine sector association Federvini, said the war in Ukraine could have irreversible long-term consequences for Italian winemakers. She noted that Italy is the largest supplier of wine to Ukraine and Russia, with combined sales of about 400 million euros last year, which is about 6% of Italian wine sales. This year, exports will drop sharply.
Manufacturers of luxury goods, including clothing, jewelry and accessories, said they expect a similar decline in exports. The coastal resort of Forte dei Marmi, which caters to Russian buyers and visitors, has suspended expansion plans days after the war broke out.
Italy's tourism sector, which has endured lockdowns and quarantines over the past two years, will be hit even harder, Michele Costabile, professor of business and management at the Luis University in Rome, said. He noted that while Russians barely made it into the top 20 in terms of number of visitors to Italy, in terms of time spent in the country they were ninth, and in terms of overall economic impact they were second, behind only Germany.
“Traditionally the average Russian visitor stayed in Italy for five or more days, compared to two or three from most other countries, and they spent around 65% more money per day than the average tourist,” Costabile said. “I assure you, the absence of Russian visitors in the sector will be felt.”
Marc Antonio Esposito, a salesman for a luxury watch shop in Rome, said the effects of the war were clear from the start. “The watches we sell start at around €5,000 and go much higher,” Esposito said. “We had enough wealthy Russian customers that we hired a Russian-speaking associate. But I don’t think I’ve seen more than two or three Russians since the start of the year.”
