International Trade in Italy

News Related to International Trade in Italy

Business outline for Italy

Main Industry Sectors

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.

Economic Overview

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.

FDI in Figures

In relation to its European neighbors, Italy does not attract but a small amount of  foreign direct investment (FDI).  After their fall in 2008, under the effect of the global crisis, the FDI flows started to revive in 2009. The privatization program led by the country, the liberalization of the energy and the markets of telecommunications offer interesting opportunities to investors.  However, a strict labor law, high taxes, inefficient public services, corruption and the activities linked to organized crime are some of the hindrances to investment.

FDI Government Measures

There is hardly any assistance in Italy for promoting foreign investment. This trend is reinforced by the European Union which wants Italy to harmonize its tax incentives with the Community regulations. Italy only promotes the development of its regions which are in difficulty, in order to facilitate SME activity and job creation. The defense sector and other sectors likely to compromise public safety are not open to foreign investors.
The Italian Institute for Foreign Trade lists and makes available a guide to aids for setting up business in Italy.

Country Strong Points

Thanks to the State withdrawal, the market is opening up to competition in several sectors (energy, telephone, etc.). The SME grouping allows for great capacity for adaptation. Italy also has a qualified work force (technical knowledge and high quality production).
Entrepreneurs are creative and innovative.

Country Weak Points

The procedural costs, slow administration processes, red tape and financial scandals do not encourage investments. In some regions, infrastructures are poor, especially in the south of the country.

Foreign Trade Overview

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.