Italy Economy Review
| Economic trends
Traditionally an agriculture based economy, Italy 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 is in the midst of a slow economic recovery. In the aftermath of the global economy’s tailspin after 11th September 2001, Italy (like the rest of the EU) saw its economy stumble. After a year of almost zero growth (+0.2%) in 2005, recovery started with an estimated growth rate of 1.5% in 2006 which is likely to continue in 2007 as well. Exports should benefit from a more favourable European economic situation and household consumption should increase. The fiscal deficit is expected to decline from an estimated 4.9% of GDP in 2006 to 3.5% in 2007. Inflation is expected to ease slightly from an estimated 2.2% in 2006 to around 2% in 2007 and 2008. Main branches of industry Italy is suffering from a decline in global competitiveness. Italy is well known for its “family” capitalism, typified by its large number of small family-run businesses. More than 90% of industrial companies have less than 100 employees and nearly 90% of companies have less than 20 employees. The agricultural sector contributes 3% of Italian GDP. Italy is the largest European producer of rice, fruit and vegetables, and the second-largest world producer and exporter of wine. Italy has limited natural resources. Most raw materials needed for manufacturing and more than 80% of the country’s energy sources are imported. Manufactured goods represented 96.5% of Italian exports in 2005. Luxury goods manufacturing is an important part of Italian industry. Its major industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric goods, and fashion and clothing. The privatisation programme and the liberalisation of the energy and telecommunications markets offer interesting opportunities for investors and exporters. The services sector contributes nearly 70% to the GDP. International trade The share of foreign trade in Italy’s GDP is more than 50%. It is further facilitated by Italy’s sizable commercial shipping fleet. Italy’s largest trade partner is the European Union. The top three export partners (countries) are: Germany, France and the USA. Italy primarily exports industrial machinery, vehicles, plastic & steel articles. The top three import partners are: Germany, France and the Netherlands. Products mainly imported are mineral fuels & oils, vehicles, electric & mechanical machinery, and iron & steel. |
