Economical overview
Italy's economy and commodity exports are
largely based on the manufacturing industry, but it is
the tourism sector that dominates. The international
financial crisis caused major problems for the country.
In addition, economic development is curbed by
corruption and mafia.
Prosperity is mainly concentrated in northern Italy,
where the industrial districts are many, especially
small and medium-sized enterprises (see Industry). The
Italian manufacturing industry is a world leader in
several industries but has seen increased competition
from low-wage countries. Since 2004, Italy's share of
world trade has steadily declined.
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Countryaah.com:
Major imports by Italy, covering a full list of top products imported by the country and trade value for each product category.
Prospects for increased growth in the long term are
hampered by corruption, large bureaucracy and a
workforce that is less educated and has lower
productivity than in the rest of Europe, which in turn
discourages investors.
Another problem is that Italy has a high proportion
of older people in the population. An aging population
means growing budget expenditures and decreasing tax
bases for an economy where low tax morale is already a
fundamental problem.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including ITA which represents the country of Italy.
Italy's southern parts are economically and socially
disadvantaged with unemployment and inefficient
agriculture. There are also the country's big mafia
companies: Cosa Nostra in Sicily, Camorran around Naples
and 'Ndrangheta in Calabria. Mafia's operations, such as
drug trafficking, smuggling and prostitution, as well as
black jobs of various kinds are included in the informal
sector, which according to the IMF corresponded to close
to one fifth of GDP in 2017.
Millions of people have emigrated from the south to
the industrial cities of northern Italy or abroad, and
young people in particular are moving out. The
government of Rome has over the years, inter alia, with
the help of EU grants, tried to speed up development in
the south, but serious structural problems prevent. Some
of the money has been lost to the mafia, and several
industrial projects have been abandoned following major
losses.
Crisis in the euro zone
Until the 1990s, the state's involvement in the
economy was extensive, but then a number of state
companies were sold out. In the context of an economic
crisis, Italy abandoned the EU's exchange rate
cooperation in 1992, and the value of the lira was then
devalued several times. Despite excessive government
debt, Italy joined the currency union EMU and switched
to the euro as currency in 1999.
Since then, for most years, the country has broken
the euro zone rule of no more than 3 percent budget
deficit because tax revenues have not covered the
expenses of an oversized state apparatus, a costly
social insurance system and interest rates on a large
government debt.
The international financial crisis of 2008 had severe
repercussions for export-dependent Italy. Growth turned
downwards as budget deficits, government debt and
interest expenses grew. Unemployment soared and domestic
consumption fell.
In 2010, controversial budgetary savings were
implemented, including through frozen public wages and
increased retirement age, but after speculation that
Italy could become the next victim of the eurozone debt
crisis after Greece, the International Monetary Fund (IMF)
called for more austerity.
More savings with privatizations and increased taxes
followed. At the same time, the European Central Bank
intervened and guaranteed the purchase of Italian
government bonds so that the government could sell them
and manage budget spending, but the problems remained.
When the central government debt at the end of 2011
corresponded to 120 percent of Italy's GDP, the IMF and
the EU demanded quarterly monitoring of Italy's economic
policies.
After Berlusconi
The economic crisis also had a political dimension.
Prime Minister Silvio Berlusconi had lost his confidence
in the eyes of the outside world. The turning point came
with Berlusconi's departure in late 2011 and the
appointment of an expert government led by economist
Mario Monti.
Monti's government implemented further cuts in health
care and public administration, among other things, and
initiated a liberalization of the rigid labor market
(see Labor Market). The tightening continued under
subsequent governments. There was also some room for
stimulus measures. But the struggle to balance the
economy was slow. In 2015, hopes of a recovery were
raised. GDP increased by 0.7 percent compared to the
previous year and the budget deficit landed at 2.6 per
cent. However, debt was still the highest in the EU
after Greece, corresponding to over 132 percent of GDP.
Government debt remained stubbornly at about the same
level during the second half of the decade.
FACTS - FINANCE
GDP per person
US $ 34,318 (2018)
Total GDP
US $ 2,073,902 million (2018)
GDP growth
0.9 percent (2018)
Agriculture's share of GDP
1.9 percent (2018)
Manufacturing industry's share of GDP
15.0 percent (2018)
The service sector's share of GDP
66.1 percent (2018)
Inflation
0.7 percent (2019)
Government debt's share of GDP
132.2 percent (2018)
Currency
euro 1
- 1 euro = 100 cents
2009
December
Manifestation against Berlusconi.
Large demonstrations are held in Rome with demands for the departure of the
Prime Minister. Berlusconi is accused, among other things, of having been in
contact with the mafia, which he denies.
Ministers in court
Berlusconi's deputy finance minister is charged with conspiring with the
mafia, and the regional minister is facing charges of bribery.
October
New party leader
Pierluigi Bersani is elected as the new leader of the opposition party
Democratic Party.
Protection against prosecution is being revoked
The Constitutional Court repeals the law Prime Minister Berlusconi pushed
through in July 2008 to protect himself from prosecution, and the trials against
him can be resumed. Berlusconi is prosecuted, among other things, for tax
offenses, false accounting and bribery.
July
Tighter rules against illegal immigration
Parliament's House of Commons, the Senate, adopts a contentious law on
illegal immigration with very high fines for anyone staying in the country
without a permit. Paperless immigrants can be held in deportation camps for up
to six months. The law has previously been approved by Parliament's lower house,
the Chamber of Deputies.
May
Berlusconi in windy weather
Prime Minister Berlusconi is being squeezed by information about amorous
outbursts with young girls. His wife is asking for divorce. This will start a
legal battle over Berlusconi's wealth, which is estimated at € 6.5 billion.
March
Alliance becomes party
The people of freedom who won the 2008 elections are transformed into a
political party since both parts - the National Alliance and Heja Italy -
formally ceased to exist. Silvio Berlusconi is elected party leader.
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