Economy of Italy
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| Economy of Italy | ||
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| Italian Euro coins 2006 | ||
| Currency | Euro (EUR) | |
| Fiscal year | Calendar year | |
| Trade organisations | EU, WTO (via EU membership) and OECD | |
| Statistics | ||
| GDP (PPP) | $1.8tn (2007 est.) (7th) | |
| GDP growth | 1.9% (2007 est.) | |
| GDP per capita | $31,000 (2007 est.) | |
| GDP by sector | agriculture (2%), industry (29.1%), services (69%) (2006) | |
| Inflation (CPI) | 2.3% (2006 est.) | |
| Population below poverty line |
12% (2002) | |
| Gini index | 36 (2000) | |
| Labour force | 24.63m (2006 est.) | |
| Labour force by occupation |
services (63%), industry (32%), agriculture (5%) (2005) | |
| Unemployment | 6.7% (2007) | |
| Main industries | tourism, commerce, communications, machinery, iron and steel, chemicals, food processing, textiles, automobiles, home appliances, clothing, footwear, ceramics | |
| External | ||
| Exports | $474.8bn (2007) | |
| Export goods | engineering products, textiles and clothing, production machinery, motor vehicles, electric goods, transport equipment, chemicals; food, beverages and tobacco; minerals, nonferrous metals | |
| Main export partners | Germany 13.6%, France 12.3%, U.S. 8.0%, Spain 7.2%, UK 6.9%, Switzerland 4.2% | |
| Imports | $483.6bn (2006) | |
| Import goods | engineering products, chemicals, transport equipment, energy products, minerals and nonferrous metals, textiles and clothing; automobiles, electronics, food, beverages, tobacco | |
| Main import partners | Germany 18%, France 10.9%, Netherlands 5.9%, Spain 4.6%, Belgium 4.4%, UK 4.3%, the People's Republic of China 4.2% | |
| Gross External Debt | {{{gross external debt}}} | |
| Public finances | ||
| Public debt | (107.8% of GDP) (2006 est.) | |
| Revenues | $832.9bn (2006 est.) | |
| Expenses | $925bn (2006 est.) | |
| Economic aid | donor: $2.48 billion, 0.15% of GDP (2004) [1] | |
| Main data source: CIA World Factbook All values, unless otherwise stated, are in US dollars |
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The economy of Italy has changed dramatically since the end of World War II. From an agriculturally based economy, it has developed into an industrial country ranked by both the World Bank and the International Monetary Fund as the world's seventh largest economy in USD exchange-rate terms and either the ninth (World Bank) or tenth (IMF and the CIA World Factbook) largest in terms of purchasing power parity (PPP). More recently, Italy has faced sluggish economic growth and reduced international competitiveness. However, statistics as of 2007 show signs of acceleration in GDP growth, estimated at 2% in 2006, a record high since 2000.
The country belongs to the Group of nine (G9) industrialized nations; it is a member of the European Union and the OECD.
Italy's economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. The country has been less successful in terms of developing world class multinational corporations. In addition, the small and medium-sized firms typically manufacture products that are technologically moderately advanced and therefore increasingly face crushing international competition. However, Italy's Institute for Foreign Trade, has initiated the "Machines Italia" program, in conjunction with leading Italian machinery manufacturers' associations to promote Italian manufacturers' recognized attributes for creativity, flexibility and innovation in bringing customized solutions to their clients. Currently the Machines Italia program operates in various foreign markets as the United States, Canada and Mexico.
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[edit] Recent economic development
Since 1991, economic policy in Italy has focused primarily on reducing government budget deficits and reining in the national debt. Successive Italian governments have adopted annual austerity budgets with cutbacks in spending, as well as new revenue raising measures. Italy has enjoyed a primary budget surplus, net of interest payments, for the last 7 years. The deficit in public administration declined to 1.4% of GDP in 2000, down from 7% in 1995. Italy joined the Economic and Monetary Union in May 1998. The national debt, which stood at roughly 124% of GDP in 1995, declined steadily until about 2002, but is rising again because of slow growth. The deficit-to-GDP ratio is likely going to be higher than the EU limit of 3.0% in 2005, and estimates of up to 5.1% have appeared.
Italy entered an economic crisis in 1999, with GDP growth at about zero, although GDP has started to grow again as of 2005. Previously, Italy's economy had accelerated from 0.7% growth in 1996 to 1.4% in 1999 and continued to rise to about 2.90% in 2000, which was closer to the EU projected growth rate of 3.10%. Domestic demand and exports were the dominant factors in GDP growth, but it nevertheless remains one of the lowest among industrialised countries. Since 2002, growth has gradually slowed, reaching recession conditions. The opposition blamed Silvio Berlusconi's government for incompetence, especially the minister of economy Giulio Tremonti. A report of the Economist, entitled Addio, dolce vita ("Farewell, sweet life") parallels current status of Italian economy to that of the Republic of Venice in 1797, a country with "many attractions" but living "a slow, long decline". Italy was called "the real sick man of Europe" in a 2005 report of The Economist. Import growth continues to outpace export growth, resulting in a trade deficit in 2000 of $1.3 billion, down from $14 billion in 1999 and $60 billion in 1996.
With respect to inflation of forms, Italy is now firmly within norms specified for Economic and Monetary Union (EMU), a major achievement for this historically inflation-prone country. Consumer inflation fell from 3.9% in 1996 to 1.7% in 1999 but did rise again to 2.5% in 2000. The 1992 agreement on wage adjustments, which has helped keep wage pressures on inflation low, remains in effect. Tight monetary policy by the Bank of Italy also has helped bring inflation expectations down. Since 1999, a combination of the introduction of the euro and a house price boom are blamed for a rate of inflation estimated by academics as at least 15%, although officially it is around 2.5% [2]. Most Italians maintain that with the euro, prices doubled overnight. This was not due to the new currency in itself (widely reviled especially from the political right, since it was Romano Prodi, the center-left's leader, who headed UE's efforts in that direction), but to massive dishonesty on part of pricemakers and resellers, in damage of fixed wage perceivers and pensioners. This has furthermore widened an already worrying division of Italian society, heading towards the "haves vs. have nots" model.
[edit] Labor
Unemployment has been steadily decreasing (6.7% in 2007, its lowest level since 1992). But is severe in the south, where average unemployment can exceed 20%. Women and youth have significantly higher rates of unemployment than men. In past years, some claimed the rigid labor market was a disincentive to job creation. After a series of unpopular flexibility measures were passed, employment improved somewhat, but there have been reports of many companies abusing these measures in a series of ways, in order to force employees to work more hours than legal, and providing less secure jobs. There is a significant underground economy, especially in the south where it partially offsets the high official unemployment rate, absorbing substantial numbers of people, working for low wages and without standard social benefits and protections.
Unions claim to represent 40% of the work force. Most Italian unions are grouped in three major confederations: the Italian General Confederation of Labor (CGIL), the Italian Confederation of Workers’ Trade Unions (CISL), and the Union of Italian Labor (UIL), which together claim 35% of the work force. These confederations formerly were associated with important political parties (respectively the Italian Communist Party, the Christian Democracy and the Italian Socialist Party), but they have formally terminated such ties. Nowadays, the three often coordinate their positions before confronting management or lobbying the government. The three major confederations have an important consultative role on national social and economic issues. Among their major agreements are a 4-year wage moderation agreement signed in 1993, a reform of the pension system in 1995, and an employment pact, introducing steps for labor market flexibility in economically depressed areas, in 1996. The CGIL, CISL, and UIL are affiliates of the International Trade Union Confederation. Of the three unions, CGIL is the strongest in numbers. CGIL once single-handedly organized a three-million people rally in Rome.
Italy's employers are represented by Confindustria, the Italian Employers' Federation.
[edit] Primary sector
The eastern part of Italy produces primarily grains, rice, maize corn, sugar beets, soybeans, meat, fruits and dairy products, while the south specializes in producing fruits, vegetables, oil and durum wheat. Italy is the third largest producer of wine in the world and one of the leading in olive oil, fruits (apples, oranges, lemons, pears, apricots, peaches, cherries, strawberries, kiwi), flowers and vegetables.
According to the Agriculture Census, there were 2.6 million farms in 2000 (down from 3 million in 1990,) covering 19.6 million hectares. The vast majority (94.7%) are family-operated and small, averaging only 5 hectares in size. Of the total surface area in agricultural use (forestry excluded,) grain fields take up 31%, olive tree orchards 8.2%, vineyards 5.4%, citrus orchards 1%, other orchards 3.8%, sugarbeets 1.7%, and horticulture 2.4%. The remainder is primarily dedicated to pastures (25.9%) and feed grains (11.6%.) Livestock includes 6 million heads of bovines, 8.6 million heads of swines, 6.8 million heads of ovines, and 0.9 million heads of caprines.
[edit] Mineral resources and energy
Italy has few natural resources. With much of the land unsuited for farming, it is a net food importer. There are no substantial deposits of iron, coal, or oil. Proven natural gas reserves, mainly in the Po Valley and offshore Adriatic, have grown in recent years and constitute the country's most important mineral resource. Most raw materials needed for manufacturing and more than 80% of the country's energy sources are imported.
[edit] Industry
Northern Italy (Piedmont, Lombardy, Veneto, Emilia Romagna) has traditionally made up the core of Italian industry. Key benefits include easy trade with the rest of Europe, hydroelectricity from the Alps, and workable, flat land. The FIAT factory, for example, is located in Turin. Most Italian industries, often of small size, are located in the "industrial triangle" (Milan, Turin, Genoa) and in some centres of Northeast and Emilia Romagna.
Famous Italian foods have been brought to the rest of the world through Italian emigration, especially to the United States, Germany, France, Canada, Brazil, Argentina and Australia. Italian foods include a multitude of pasta, spagetti dishes (originating in 1500s Italy), pizza (born in 1800s Naples), ice cream, parma ham, rice, parmesan cheese and wine. The most famous Italian wines are probably the Tuscan Chianti and Piedmontese Pinot Grigio. Other famous wines are Barbaresco, Barolo and Barbera (Piedmont), Brunello di Montalcino (Tuscany), Montepulciano d'Abruzzo (Abruzzo) and Nero d'Avola (Sicily). Quality goods in which Italy specialises are often DOC or 'of controlled origin'. This DOC certificate, which is attributed by the European Union, ensures that the origins and work that goes into a product are recognised. This certification is considered important by producers and consumers alike, in order to avoid confusion with low-quality mass-produced ersatz products, such as Cambozola, a German copy of Gorgonzola.
Italy is known also for its fashion houses; Versace, Valentino, Fendi, Gucci, Prada, Roberto Cavalli, Sergio Rossi, Dolce & Gabbana, Benetton, Armani and others.
The only Italian automaker is FIAT, specialized in utilitaries and luxury vehicles, with the brands FIAT, Lancia, Alfa Romeo, Ferrari and Maserati. The Piedmontese group has struggled in recent times due to high input costs and declining market share, although a recent revival has seen a return to profit. Italian industry produces also motorcycles and scooters, due to groups like Piaggio and Ducati.
Italy has a huge production of home appliances, especially in Lombardy (Candy), Marche (Merloni) and Northeastern regions.
The Time magazine reported in early 2008 that the mafia's purchasing power was estimated at almost $125 billion (or 7 per cent of the GDP of Italy).
- See also: Italian mafia
[edit] Italian exports
Italy's major exports are precision machinery, motor vehicles (utilitaries, luxury vehicles, motorcycles, scooters), chemicals and electric goods, but the country's more famous exports are in the fields of food and clothing.
Italy's closest trade ties are with the other countries of the European Union, with whom it conducts about 59% of its total trade. Italy's largest EU trade partners, in order of market share, are Germany (19%), France (13%), and the Netherlands (6%).
[edit] See also
- OECD's Italy country Web site and OECD Economic Survey of Italy
- Economy of Europe
- Commemorative coins of Italy
- Economy of Italy under Fascism, 1922-1943
[edit] External links
- Banca D'Italia (Italy's Central Bank)
- National Institute of Statistic (ISTAT) (in Italian)
- International Cooperation Center for Statistics (ICSTAT)
- Sebastian Cresswell-Turner, the New Statesman, 20 September 2004, "House prices? In Italy, too, people talk of little else"
- Report about economic survey of Italy by OECD (May 2005)
- The Italian portal about patents and intellectual property
- Italian Trade Commission's Machines Italia campaign page
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