Italy: Economic and Political Outline

Economic Overview

Italy, having already experienced weak economic growth when compared with the European average, was severely affected by the global crisis. Its economy contracted by 5% in 2009. Despite having turned around in 2010, the Italian economy once again entered into a recession in the second half of 2011 and is expected to contract by 1.3% in 2012.

Following the resignation of Silvio Berlusconi, the technocrat Mario Monti launched the latest austerity plan designed to boost growth and restore confidence. Priorities include the handling and reduction of the colossal public debt (120% of GDP), as well as maintaining the banking system and Italy’s place in the Eurozone. An accelerated path to retirement reform, the reintroduction of a real estate tax, and a tax hike on luxury products are also expected. Measures for economic liberalization were adopted in January and submitted to Parliament for approval.

The unemployment rate, which has risen since the global financial crisis, sits around 8.7% without the inclusion of layoffs. Regional inequalities are important as well, between the industrial and dynamic north and the rural and poorer Mezzogiorno south.

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.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

60.3/100

Position:

Moderately free

World Rank:

83/179

Regional Rank:

36/42

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: 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.

Sources of General Economic Information

Ministries

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

Main Online Newspapers

La Repubblica (only in Italian)
Corriere della Sera (only in Italian)
La Stampa (only in Italian)
Il Tempo (only in Italian)

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 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: Interim: Mario MONTI - Independent (since 13 November 2011)

Next Election Dates

Legislative elections: 2013

Indicator of Freedom of the Press

World Rank:

61/179

Evolution:

11 places down compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: 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 is 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.).