Economic Analysis: Italy’s Economy Faces An Uncertain Future

 

Italy remains one of the largest economies in the world, but several uncertainties around its future remain.

Italy’s economy has shrunk by around 10 per cent since 2007, as the country endured a triple-dip recession. Output has regressed to levels of over a decade ago. Overall unemployment is around 12-13 per cent, with youth unemployment around 40 per cent. Consumption and investment are flaccid.

The damage is long term, with as much as 15 per cent of Italian industrial capacity destroyed, reducing employment and growth potential. Once its strength, Italy’s smaller enterprises have contracted as a result of low sales, declining profitability and lack of financing.

Italy’s economy is increasingly unbalanced with high end producers, such as those in luxury products and also advanced manufacturing, benefitting from demand from emerging markets. Other sectors, such as standard automobiles, domestic appliances and low-priced fabrics and clothes have found it difficult to compete with manufacturers based in emerging markets.

But to be realistic for a moment, I think Italy has a reasonably successful economy based on several factors such as Geographic location, historical presence, and industrialization.

Italy is the 8th largest export economy in the world and the 22nd most complex economy according to the Economic Complexity Index (ECI). In 2014, Italy exported $509B and imported $466B, resulting in a positive trade balance of $43.5B. In 2014 the GDP of Italy was $2.14T and its GDP per capita was $35.5k.

They are fully integrated in international trade, and have billions of mutual trade tied in with the US, Germany, and China, which signifies they can remain sustainable for many years.

In 2014 Italy exported $509B, making it the 8th largest exporter in the world. During the last five years the exports of Italy have increased at an annualized rate of 5.4%, from $391B in 2009 to $509B in 2014. The most recent exports are led by Packaged Medicaments which represent 4.49% of the total exports of Italy, followed by Refined Petroleum, which account for 3.27%.

If there efficiency can continue in these areas, and if they can adapt properly and integrate new technologies in the manufacturing process (which is very important to their economy) I’m sure they will remain one of the world’s largest economies for quite some time.

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David McDonald

David McDonald

David is a 19-year-old Canadian student currently attending the University of Guelph. He currently studies Public Management and economics with hopes of one day becoming an accomplished journalist. David enjoys reporting on global events and actively try to make a difference in the world.
David McDonald

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