, owing in particular to growing exchanges with new eu member states and the emerging economies. in 2011, euro - area exports and imports accounted for 49 percent of gdp, up from 32 percent in 1999 ; the corresponding figure for both the us and japan is 29 percent. the area ’ s financial assets and liabilities vis - a - vis the rest of the world amounted to 184 and 196 percent of gdp, respectively, up from 92 and 99 percent in 1999. in the us the corresponding figures in 2010 were 140 and 157 percent. italy is very open to foreign trade. trade with countries outside the euro area is worth about 34 percent of italian gdp and 6 percent of euro - area gdp. including exchanges with the rest of the euro area, italy ’ s openness is even more pronounced, the total value of foreign trade equalling 59 percent of gdp. the share of manufacturing exports in gdp is high compared to other advanced countries. in 2009 about 90, 000 manufacturing firms – a fifth of all italian manufacturers – sold part of their output abroad. many are able to reach distant, difficult markets like china : this is the case for 8, 600 italian industrial firms, against 6, 300 german firms and 4, 200 french firms. in 2011, italy ’ s foreign financial assets and liabilities amounted to 119 and 140 percent of gdp, respectively, up from 92 and 97 percent in 1999. 4. the crisis risks leading to re - nationalization of financial portfolios. the perceived risks are amplified by the uncertainty over the resolution of events that are in many respects bis central bankers ’ speeches unprecedented. the key is careful and timely analysis of each national economy and of the actors within them. the opportunities offered by financial diversification in a global environment are potentially intact. ongoing reform efforts in the euro - area countries aim at preserving their attractiveness for financial diversification. °°° 5. the crisis has highlighted the weaknesses of eu and especially euro - area governance. first, the stability and growth pact failed to provide sufficient incentives to correct fiscal imbalances. second, budgetary discipline alone could not avert the financial tensions generated by macroeconomic imbalances. third, the eu lacked a mechanism for managing systemic crises. emu governance hinged on fiscal rules and a no - bail - out clause. the rules were deemed necessary because “ the constraints imposed by market forces might either be too slow and weak or too sudden and disruptive ” ( delors committee, 1989 ). economic convergence was expected

" sovereign debt " crisis, right after, have rocked the italian economy, just while it was struggling to adjust to the new technological and global market environment. to give you a sense of the blow inflicted to the real economy by these two shocks combined, the cumulate drop in gdp during the crisis reached 9 percent ; industrial production fell by a quarter. the fall in global demand severely hit exporting firms, precisely those that were fighting hard to “ go global ”. it was the great recession. there is a big difference between the two shocks, and that regards the effects on the banking system. in the couple of years following the default of lehman brothers, italian banks weathered the storm. much like japanese banks, they were not substantially involved in the " toxic " asset kind of problem affecting banks of other countries. hence, they were able to absorb the turbulence coming from the recession with no support from taxpayers'money. but the sovereign debt crisis kicked in. it paralyzed the cross border interbank market in europe. credit started to decrease, especially to smes. the recession deepened. italian banks, facing a strong rise in non - performing loans and a sharp increase in the cost of funding, saw their profits and capital squeezed, further impairing their ability to support the real economy in a vicious spiral. when the sovereign debt crisis subsided the conditions of our banks improved, but the issue of bad loans still figures prominently on the policy agenda in italy these days. risks and opportunities for the future the macroeconomic scenario is now getting better in italy. a recovery started one year ago. yet the rates of growth projected for this year and the next one look still insufficient to reabsorb unemployment. we still see a lack of aggregate domestic demand, determining an output gap that we estimate at around 5 per cent. the common monetary policy put in place by the european central bank is doing its best to contrast deflationary risks still visible in the euro area. on the fiscal side, italy has inherited from a long season of excessive current expenditure started in the seventies a high level of public debt. hence, fiscal policy has now a limited room for manoeuver, also given the constraints posed by the european rules. the government is bis central bankers ’ speeches fully using the available flexibility. in terms of composition of the budget, it is aiming at changing it in a more growth - friendly manner. consumers'and investors'confidence has to be restored, with the help of macroeconomic policies, in order