Renowned for its art, food and rich history, Italy remains an attractive economy for investment

Economy of Italy

The economy of Italy is the third-largest national economy in the European Union, the eighth-largest by nominal GDP in the world, and the 12th-largest by GDP (PPP). Italy is a founding member of the European Union, the Eurozone, the OECD, the G7 and the G20; it is the eighth-largest exporter in the world, with $514 billion exported in 2016. Its closest trade ties are with the other countries of the European Union, with whom it conducts about 59% of its total trade. The largest trading partners, in order of market share, are Germany (12.6%), France (11.1%), the United States (6.8%), Switzerland (5.7%), the United Kingdom (4.7%) and Spain (4.4%).

Italy is a large manufacturer (overall the second in EU behind Germany) and exporter of a significant variety of products including machinery, vehicles, pharmaceuticals, furniture, food, clothing, and robots. Italy has therefore a significant trade surplus. The country is also well known for its influential and innovative business economic sector, an industrious and competitive agricultural sector (Italy is the world’s largest wine producer), and manufacturers of creatively designed, high-quality products including automobiles, ships, home appliances, and designer clothing. Italy is the largest hub for luxury goods in Europe and the third luxury hub globally.

Italy is the largest hub for luxury goods in Europe and the third luxury hub globally

The automotive industry is a significant part of the Italian manufacturing sector, with over 144,000 firms and almost 485,000 employed people in 2015, and a contribution of 8.5% to Italian GDP. Fiat Chrysler Automobiles or FCA is currently the world’s seventh-largest auto maker. The country boasts a wide range of acclaimed products, from very compact city cars to luxury supercars such as Maserati, Lamborghini, and Ferrari, which was rated the world’s most powerful brand by Brand Finance.

According to the Human Development Index, the country enjoys a very high standard of living, and has the world’s 8th highest quality of life according to The Economist. Italy owns the world’s third-largest gold reserve, and is the third-largest net contributor to the budget of the European Union. Furthermore, the advanced country private wealth is one of the largest in the world.

Italy Economic Indicators

Italy GDP Growth Rate

Italy is the ninth largest economy in the world and the third largest in the Euro Zone. The country has a diversified industrial base driven in large part by manufacturing of high-quality consumer goods. Composition of the GDP on the expenditure side: household consumption (61 percent), government expenditure (19 percent) and gross fixed capital formation (17 percent). Exports of goods and services account for 30 percent of GDP while imports for 27 percent, adding 3 percent to total GDP.

Italy Interest Rate

Italy is a member of the European Union which has adopted the euro. Italy’s benchmark interest rate is set by the European Central Bank. The official designation for the rate is main refinancing operation.

Italy Inflation Rate

In Italy, the most important categories in the Consumer Price Index are: food and non-alcoholic beverages (16 percent of total weight); transport (15 percent); restaurants and hotels (12 percent); housing, water, electricity and other fuels (10 percent); and miscellaneous goods and services (10 percent). The index also includes: health (9 percent); recreation and culture (8 percent); clothing and footwear (7 percent); and furnishing and household equipment (7 percent). Alcoholic beverages, tobacco, communication and education contribute with the remaining 6 percent.

Italy Unemployment Rate

In Italy, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force.

Italy Government Dept to GDP

Italy recorded a government debt equivalent to 134.80 percent of the country’s Gross Domestic Product in 2019. Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields.

Italy Balance of Trade

In 2017, Italy’s trade surplus fell to EUR 47 billion from a record high of EUR 50 billion in the previous year, as imports jumped 9 percent to EUR 401 billion, the highest level since 2011, and exports rose at a softer 7 percent to an all-time high of EUR 448 billion. The biggest trade surpluses were recorded with the United States, the United Kingdom, France, Switzerland, Poland and Japan; and the biggest trade deficits with China, the Netherlands, Germany, Belgium and Russia.

Italy Currency Euro

The euro is the official currency of Italy, which is a member of the European Union. The Euro Area refers to a currency union among the European Union member states that have adopted the euro as their sole official currency. In Italy, interest rate decisions are taken by the Governing Council of the European Central Bank.

Italy Stock Market

The FTSE MIB (Milano Italia Borsa) Index is a major stock market index which tracks the performance of 40 leading and most liquid and companies listed on the Borsa Italiana. It is a free floating, capitalization-weighted index. The base value of the FTSE MIB Index was set at the level of the MIB 30 Index at the close of trading on October 31, 2003 at 10644 points. .

Italy Ease of Doing Business

Italy is ranked 58 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Italy deteriorated to 58 in 2019 from 51 in 2018. The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operationstronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.

Italy Business Confidence

Italy’s manufacturing confidence index climbed to 95.6 in October of 2020 from an upwardly revised 92.6 in the previous month, easily beating market expectations of 91.7. It was the highest level of business morale in seven months but remained below February’s pre-pandemic level and its long-term average. The current trend of order books improved (-26 vs -33.7 in September) and stocks were considered to have diminished (2.6 vs 4). On the other hand, expectations about future developments in production deteriorated (1.4 vs 1.8). The composite business morale index, combining surveys of the manufacturing, retail, construction and services sectors, rose to 92.9 in October from 91.3, as a raft of incentives in recent months aimed at propping up the economy are expected to be particularly supportive of the building sector.

In Italy, the Manufacturing Confidence Index covers 4,000 Italian companies. The questionnaire focuses on the current trend of order books, production and inventories, short-term forecasts on order books, production, prices and the general economic situation. The business confidence index is adjusted for seasonal effects and fixed to a base year of 2005. The value 100 indicates no evolution in business sentiment, a value over 100 shows increasing confidence and a value under 100 indicates low expectations.

Italy Consumer Confidence

The consumer confidence index in Italy declined to 102 in October of 2020 from a downwardly revised 103.3 in the previous month, below market expectations of 102.2. Italy has in recent weeks broken several records for new daily coronavirus infections, forcing the government to start reimposing restrictions in an effort to contain the contagion, including ordering bars and restaurants to shut early and closing gyms and swimming pools. The deterioration affected all index components: future climate (104.5 vs 109.3 in September); current conditions (99.9 vs 100.2); economic climate (87.8 vs 94.5) and personal situation (106.4 vs 107.1).

In Italy, the Confidence Climate Index covers 2,000 Italian consumers. The survey is done by phone and assesses households’ economic conditions, employment and saving prospects and expected purchases of durable goods. The consumer confidence index is adjusted for seasonal effects and fixed to a base year of 2005. The value 100 indicates no evolution in consumer sentiment, a value over 100 shows increasing confidence and a value under 100 indicates low expectations.

Italy Bank Lending Rate

Bank Lending Rate in Italy increased to 1.71 percent in September from 1.70 percent in August of 2020.

In Italy, the bank lending rate is the average rate of interest charged on loans by commercial banks to private individuals and companies.

Italy Corruption Rank

Italy is the 51 least corrupt nation out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International. The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s rank indicates its position relative to the other countries and territories in the index.

Italy Credit Rating

Standard & Poor’s credit rating for Italy stands at BBB with stable outlook. Moody’s credit rating for Italy was last set at Baa3 with stable outlook. Fitch’s credit rating for Italy was last reported at BBB- with stable outlook. DBRS’s credit rating for Italy is BBB (high) with negative outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of Italy thus having a big impact on the country’s borrowing costs. This page includes the government debt credit rating for Italy as reported by major credit rating agencies.

Taxation in Italy

Taxation in Italy is levied by the central and regional governments and is collected by the Italian Agency of Revenue (Agenzia delle Entrate). Total tax revenue in 2018 was 42,4% of GDP. Most important earnings are: income tax, social security, corporate tax and value added tax. All of those are collected at national level, but some of those differs across regions. Personal income taxation in Italy is progressive.

Corpo- rate tax	Perso- nal income tax	VAT or sales tax	Social Security Rate for Companies	Social Security Rate for Employees
24%	43%	22%	30%	9,49%%