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flag Italy Italy: Economic and Political Outline

In this page: Economic Outline | Political Outline


Economic Outline

Economic Overview

The recession which the Italian economy entered in late 2010  continued in 2013 (-1.8%), compounded by the political crisis in the country. The context of uncertainty, financial restrictions and fiscal consolidation had a negative impact on consumption and investment. Growth is expected to return to positive numbers in 2014 ( 0.7%), conditioned by constitutional reforms to avoid future political obstacles.

Benefiting from lower interest rates, the country has now exited the Excessive deficit procedure (the deficit should remain below 3%), but the economic indicators are still very worrisome. Public debt exceeds 2000 billion euro (136 % of GDP) and household consumption and investments have shrunk .

The cabinet appointed by Letta in April focused on measures to mitigate the effects of the crisis by financing partial unemployment and abolishing the property tax. After Mario Monti's resignation last year , Prime Minister Enrico Letta has also resigned and should be replaced by the new leader of the PD Matteo Renzi. Political instability has had an impact on the country's economic situation. Debt reduction and the protection of the banking system must remain a priority.

The unemployment rate, which has increased since the global financial crisis, is around 12.5%, excluding partial unempoyment.
Young people have been the hardest hit, with a rate of unemployment close to 30 %. Regional inequalities betweent he highly industrialized and dynamic North and the poor rural southern Mezzogiorno areas are high and organized crime remains a problem.

Main Indicators 20102011201220132014 (e)
GDP (billions USD) 2,059.192,196.332,014.08e2,068.37e2,147.97
GDP (Constant Prices, Annual % Change) 1.70.4-2.4e-1.8e0.7
GDP per Capita (USD) 34,12636,22733,115e33,909e35,123
General Government Balance (in % of GDP) -3.6-3.5-1.3e-0.2e-0.0
General Government Gross Debt (in % of GDP) 119.3120.8127.0e132.3e133.1
Inflation Rate (%)
Unemployment Rate (% of the Labor Force) 8.48.410.712.512.4
Current Account (billions USD) -72.34-67.15-14.88e-0.23e4.42
Current Account (in % of GDP) -3.5-3.1-0.7e-0.0e0.2

Source: IMF - World Economic Outlook Database - Last Available Data.

Note: (e) Estimated Data


Main Sectors of Industry

The agricultural sector contributes to approximately 2% of the Italian GDP. Italy is the biggest European producer of rice, fruits, and vegetables, as well as the world’s biggest wine producer and exporter. The country is one of the major agricultural players in the European Union. Yet, Italy has limited natural resources. The country must import most of the raw materials required for production and more than 80% its energy.

The Italian fabric industry is mostly composed of small and medium family businesses. More than 90% of industrial companies have less than 100 employees, thus lowering the country’s competitiveness in the global market. Luxury goods (haute couture, cars, gourmet food items) play an important role in Italian industry. The country is the premier exporter of luxury goods. Precision machinery, motor vehicles, chemical products, pharmaceuticals, electrical items, fashion, and clothing make up its major industries.

The service sector contributes to 70% of the GDP. Tourism plays a major role, making Italy the third biggest tourist attraction in Europe, after France and Spain.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 3.7 27.8 68.5
Value Added (in % of GDP) 2.1 23.9 74.0
Value Added (Annual % Change) 0.3 -3.8 -0.9

Source: World Bank - Last Available Data.


Find more information about your business sector on our service Market reports.

Learn more about Market Analyses about Italy on, the Directory for International Trade Service Providers.

Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Moderately Free
World Rank:
Regional Rank:

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation


Business environment ranking


The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

World Rank:

Source: The Economist - Business Environment Rankings 2014-2018


Country Risk

See the country risk analysis provided by Coface.


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Political Outline

Type of State
Republic based on a parliamentary democracy.
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 everyday 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: Matteo RENZI (since 22 February 2014) - Democrat Party
Next Election Dates
Presidential elections: 2020

Indicator of Freedom of the Press


The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
8 places up compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders


Indicator of Political Freedom


The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Political Freedom:
Civil Liberties:

Map of freedom 2014
Source: Freedom House


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