Italy Economy Facts
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.
- 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.
- 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. Check findjobdescriptions to learn more about 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.
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)
US $ 2,073,902 million (2018)
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)
0.7 percent (2019)
Government debt’s share of GDP
132.2 percent (2018)
- 1 euro = 100 cents
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.
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.
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.
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.
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.