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Italy
Economics
Inflation 3.6% p.a. (1990–2001)

Gross National Product (GNP): $1124bn

Exchange rates against the US$ over the last year: 0.871 euros (1.013)

SCORE CARD

World GNP ranking: 7th
GNP per capita: $19,390
Balance of payments: –$6.74bn
Inflation: 2.5%
Unemployment: 10%

Strengths

Highly competitive, innovative small- to medium-size business sector. World leader in industrial and product design, textiles, and household appliances. Several highly innovative firms include Fiat (cars), Montedison (plastics), Olivetti (communications), and Benetton (clothes). Strong tourism and agriculture sectors, prestigious fashion houses.

Weaknesses

Public deficit and government debt remain high. Recession in 2003. Inefficient public sector undergoing major privatizations. Uneven wealth distribution: northern Italy far richer than the south, which suffers three times more unemployment. Poor record on tax collection, though now much improved. Relatively small companies facing foreign competition. Heavy dependence on imported energy.

Profile

Since World War II, Italy has developed from a mainly agricultural society into a world industrial power. The economy is characterized by a large state sector, a mass of family-owned businesses, relatively high levels of protectionism, and strong regional differences. Italy also has relatively few multinationals compared with other G7 economies.

The Institute for Industrial Reconstruction (IRI), a state-owned holding company dating from the Fascist era, progressively privatized its electronics, steel, engineering, shipbuilding, telecommunications, transportation, and aerospace companies, until closing down itself in 2000. The National Hydrocarbons Group (ENI), one of the world's top players in the energy and chemicals sectors, has been privatized, as has Telecom Italia and the electricity corporation Enel. City and regional authorities own utilities, banks, and other businesses.

Family-owned businesses, which are the backbone of the private sector, include Fiat, whose interests include aero engines, telecommunications, and bioengineering, as well as cars. Similar businesses tend to congregate, encouraging local competition which has translated into national success.

The Mezzogiorno remains an exception. State attempts to attract new investment have met with success in areas immediately south of Rome, but elsewhere organized crime has deterred investors and siphoned off state funds. Anger at the misuse of state funds in the south was a powerful factor in the growth of the LN with its demands for autonomy. One-third of Italian tax revenue is generated in Italy's industrial heartland of Milan.

EXPORTS
Exports

IMPORTS
Imports

ECONOMIC PERFORMANCE INDICATOR
Economic performance indicator