Italy Economy
According to World Bank data, Italy has high levels of freedom to invest, do business, and trade. On the other hand, Italy has inefficient bureaucracy, relatively low property rights and high levels of corruption (compared to other European countries), heavy taxes, and heavy public consumption at around half of GDP. Italy has been in economic decline compared to most other EU-15 countries.
Most raw materials needed by Italian industries, and more than 75% of energy requirements, are imported. Over the past decade, Italy has pursued a tight fiscal policy in order to meet the requirements of the Economic and Monetary Union and has benefited from lower interest and inflation rates. Italy joined the Euro from its introduction in 1999.
Italy’s economic performance has at times lagged behind that of its EU partners, and the current government has enacted numerous short-term reforms aimed at improving competitiveness and long-term growth. It has moved slowly, however, on implementing certain structural reforms favoured by economists, such as lightening the high tax burden and overhauling Italy’s rigid labour market and expensive pension system, because of the economic slowdown and opposition from labour unions.
Italy has a smaller number of world class multinational corporations than other economies of comparable size. Instead, the country’s main economic strength has been its large base of small- and medium-sized companies. Some of these companies manufacture products that are technologically moderately advanced and therefore face increasing competition from China and other emerging Asian economies which are able to undercut them on labour costs. These Italian companies are responding to the Asian competition by concentrating on products with a higher technological content, while moving lower-tech manufacturing to plants in countries where labour is less expensive. The small average size of Italian companies remains a limiting factor, and the government has been working to encourage integration and mergers and to reform the rigid regulations that have traditionally been an obstacle to the development of larger corporations in the country.
Italy’s major exports are motor vehicles (Fiat Group, Aprilia, Ducati, Piaggio), chemicals, petrochemicals (Eni), electricity (Enel, Edison), home appliances (Merloni, Candy), aerospace and defense tech (Alenia, Agusta, Finmeccanica), firearms (Beretta); but the country’s more famous exports are in the fields of fashion (Armani, Valentino, Versace, Dolce & Gabbana, Benetton, Prada, Luxottica), food industry (Ferrero, Barilla Group, Martini & Rossi, Campari, Parmalat), luxury vehicles (Ferrari, Maserati, Lamborghini, Pagani) and motoryachts (Ferretti, Azimut).
Tourism is very important to the Italian economy: with over 37 million tourists a year, Italy is ranked as the fifth major tourist destination in the world.
