Italy Economy  

BACK TO THE FRONT PAGE
BASIC INFO.
ECONOMY
GEOGRAPHY
GOVERNMENT
HISTORY
HUMAN RIGHTS
LINKS
NEWS
PEOPLE
shadow 
 

ITALY
GDP (2006): $1.72 trillion.
Per capita income (2006): $29,700.
GDP growth: 0.9% (2003 est.);0.4% (2002);1.8% (2001).

Budget: Income .............. $559 Billion
Expenditure ... $589 Billion

Main Crops:
fruits, vegetables, grapes, potatoes, sugar beets, soybeans, grain, olives; beef, dairy products; fish

Natural Resources:
mercury, potash, marble, sulfur, dwindling natural gas and crude oil reserves, fish, coal.

Major Industries:
tourism, machinery, iron and steel, chemicals, food processing, textiles, motor vehicles, clothing, footwear, ceramics

NATIONAL GNP
ECONOMY
The Italian economy has changed dramatically since the end of World War II. From an agriculturally based economy, it has developed into an industrial state ranked as the world's fifth-largest industrial economy. Italy belongs to the Group of Eight (G-8) industrialized nations; it is a member of the European Union and the Organization for Economic Cooperation and Development (OECD).

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. Italy's economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. Its major industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric goods, and fashion and clothing.

Italy is in the midst of a slow economic recovery and is gradually catching up to its west European neighbors. In the aftermath of September 11, 2001and the global economy's tailspin, Italy--like the rest of the EU--saw its economy stumble. Fourth quarter 2001 results showed zero or negative GDP growth. As a result, Italy's economy decelerated from 2.9% in 2000 to 1.8% in 2001. Average euro-zone growth in 2001 was 1.4%.

In the post-September 11 period, imports decelerated faster than exports, producing an $8.5 billion surplus in 2001, up from the modest 1.8 billion surplus in 2000. With respect to inflation, Italy is now firmly within norms specified for Economic and Monetary Union (EMU), a major achievement for this historically inflation-prone country. Consumer inflation accelerated from 2.5% in 2000 to 2.8% in 2001. 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. GDP growth decreased from 2001 to 2002 from 1.8% to 0.4%. In 2002 GDP grew by a margin of 0.4% and was expected to increase 0.9% in 2003, and by 1.8% in 2004, supported by a modest recovery in economic demand.

Since 1992, 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 2001, down from 1.7% in 2000. Italy joined the European Monetary Union in May 1998. The national debt, which stood at roughly 124% of GDP in 1995, declined from 110.6% in 2000 to 109.4% in 2001, as it steadily falls toward the EU-imposed debt/GDP ratio of 60% of GDP. The last balance-of-payments data show a current account deficit of 7.3 billion euro in 2002. In light of the stability pact, the EU has been closely watching the national deficit situation in Italy.

Italy's closest trade ties are with the other countries of the European Union, with whom it conducts about 54.4% of its total trade (2002 data). Italy's largest EU trade partners, in order of market share, are Germany (15.5%), France (11.6%), and the United Kingdom (5.9%).