Business Environment in Italy
Italy had experienced a lower growth than the European average, and it was severely affected by the global crisis, its economy reduced to -5% in 2009. However, it benefited from the revival in global demand and the return of confidence. The exports and investments recovered in 2010, providing a growth rate evaluated at 1% of the GDP. According to the forecast, the growth rate should remain weak in 2011.
The government has launched different social measures in order to try to help those who are in the most unfavorable conditions, which had a direct consequence on increasing dramatically the public expenditures of a country that has one of the highest public debts in the world (more than 100% of the GDP). The government has, then, adopted a rigorous plan of EUR 24 billions in three years, it has frozen salaries and increased taxes with the purpose of attempting to bring the public deficit to 2.7% in 2012 and reducing its debt/GDP ratio. The priority is also given to the fight against tax avoidance in this country where the black economy is very significant.
The unemployment rate has risen to about 8.7%. Regional inequity is very pronounced, specially between the north, which is very industrialized and dynamic, and the rural and poor regions of Mezzogiorno in the south.
|GDP (billions USD)||2,116.64||2,055.11e||2,181.36e||2,245.91e||2,304.31|
|GDP (Constant Prices, Annual % Change)||-5.2||1.3e||1.1e||1.3e||1.4e|
|GDP per Capita (USD)||35,251||34,059||35,985||36,890||37,698|
|General Government Balance (in % of GDP)||-3.9||-2.9||-2.8||-2.2||-2.4|
|Inflation Rate (%)||0.8||1.6e||2.0e||2.1||2.0|
|Unemployment Rate (% of the Labor Force)||7.8e||8.5||8.6||8.3||7.9e|
|Current Account (billions USD)||-71.27e||-59.25e||-57.83e||-57.66e||-|
|Current Account (in % of GDP)||-3.4e||-2.8||-2.7||-2.6||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors of Industry
The agricultural sector contributes to about 2% of the Italian GDP. Italy is the biggest European producer of rice, fruits and vegetables, and also the world's biggest producer and exporter of wine. The country is one of the major agricultural powers in the European Union. However, Italy has limited natural resources. The country has to import most of the raw materials required for production and more than 80% of its energy resources.
Italy's fabrics industry is made up mostly of small and medium family businesses. More than 90% of the industrial companies have less than 100 employees. In this context, the country is suffering from a decline in global competitiveness. The manufacture of luxury goods (haute couture, cars, delicatessen foods) represents a significant part of the Italian industry. The country is the prime exporter of luxury goods. Its main industries deal with precision machinery, motor vehicles, chemical products, pharmaceutical products, electrical items, fashion and clothing.
The services sector contributes to 70% of the GDP. Tourism plays a major role, Italy is the third most-visited European country, after France and Spain.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||3.8||29.7||66.3|
|Value Added (in % of GDP)||1.8||25.1||73.1|
|Value Added (Annual % Change)||-3.1||-13.4||-2.5|
Source: World Bank - Last Available Data.
|Euro (EUR) - Average Annual Exchange Rate For 1 USD||0.80||0.80||0.73||0.68||0.72|
Source: World Bank
Indicator of Economic Freedom
- Moderately free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
Italy is amongst the top 10 trade countries in the world and trade represents almost 60% of the GDP. Manufactured goods account for more than 90% of the country's exports. The country shows a deficit in trade and its balance got worse after the rise in oil prices in 2008 (the country imports 80% of its energy resources), and the appreciation of the euro. Despite its recent improvement, the trade balance should continue to deteriorate in the next coming years. The main trade partners of Italy are the European Union (Germany, France, Spain, Netherlands, United Kingdom), China, the United States, Switzerland and Russia.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||442,555||511,662||561,919||415,105||483,950|
|Exports of Goods (million USD)||416,875||499,882||542,748||406,909||447,847|
|Imports of Services (million USD)||98,032||118,554||127,207||107,094||108,184|
|Exports of Services (million USD)||97,372||110,439||114,526||93,953||97,021|
|Imports of Goods and Services (Annual % Change)||5.9||3.8||-4.3||-14.5||-|
|Exports of Goods and Services (Annual % Change)||6.2||5.0||-||-||-|
|Imports of Goods and Services (in % of GDP)||28.6||29.2||29.5||24.4||-|
|Exports of Goods and Services (in % of GDP)||27.7||29.0||28.9||24.0||-|
|Trade Balance (million USD)||-12,510||4,581||-1,046||3,259||-|
|Trade Balance (Including Service) (million USD)||-14,038||-5,080||-11,403||-||-|
|Foreign Trade (in % of GDP)||56.3||58.2||58.3||48.3||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|United Arab Emirates||1.3%|
|Other partnersClose extended list||59.2%|
(% of Imports)
|Other partnersClose extended list||58.1%|
Sources of General Economic Information
Ministry of the Economy and Finance
Ministry of Economic Development
Ministry of Commerce
Ministry of Agricultural and Forestry Policies
Ministry of Foreign Affairs
- Statistical Office
National Institute of Statistics (Istat)
- Central Bank
Bank of Italy
- Stock Exchange
Italian Stock Exchange
- Search Engines
- Economic Portals
- Executive Power
- The Prime Minister is the head of the government and holds the executive power, which includes the implementation of the law and the running of the everday business of the country. The Prime Minister is appointed by the President and confirmed by the Parliament, on the basis of the support of the majority. He has a five year term of office. The Council of Ministers is appointed by the Prime Minister and approved by the President.
- Legislative Power
- The legislative power in Italy is bicameral. The Parliament consists of two houses: the Senate (Senato della Repubblica) which has 315 members and the Chamber of deputies (Camera dei deputati) which has 630. The members of the two houses are directly elected, by universal suffrage, by a complex electoral system (amended in 2005) combining proportional representation with a majority vote. The executive branch of government depends directly or indirectly on the support of parliament, often expressed by a vote of confidence. The Prime Minister cannot dissolve Parliament. Italian citizens enjoy considerable political rights.
- Main Political Parties
- There are very many parties in Italy and none of them can claim power alone. Because of this, parties have to come to an agreement to form coalition governments.
The country's political parties align themselves in two broad coalitions:
1) The Union : center-left including mainly political parties like the Democrat Party (Partido Democratico) led by Walter Veltroni, the Party Italia dei Valori (IdV), led by Antonio Di Pietro and the Italian Communist Party.
2) The House of Freedoms: center-right including mainly parties like the People of Freedom (Popollo Della Liberta), led by Silvio Berlusconi, the LEGA (Northern League) led by Umberto Bossi and the Movement for Autonomies (MPA), led by Raffaele Lombardo.
- Current Political Leaders
- President : Giorgio NAPOLITANO (since May 2006)
Prime Minister: Silvio Berlusconi.
- Next Election Dates
- Legislative elections: 2013
Indicator of Freedom of the Press
- World Rank:
- 5 places down compared to 2008
Indicator of Political Freedom
- Political Freedom:
- Civil Liberties:
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