Italy’s economy is divided into two main areas of industry and agriculture. These two contributors are divided by geography and income. While the North is highly developed and relatively well off, the South is less developed and has a high unemployment. This disparity is only one in a strange economic system that is full of extremes.
Industry is the main contributor to Italy’s economy. The major producers are small, family-owned companies. Italy’s most important industries include:
- Iron and steel
Most of Italy’s manufacturing plants are located in the North. The service sector, which has grown to contribute 73% of the nation’s Gross Domestic Product, (GDP), is also focused mainly in northern Italy.
While most of Italy’s agriculture is located in the less-developed South, Italy has a total of 2.6 million farms. Small family-run farms of less than 5 hectares comprise 94% of Italy’s farms, which contributes to the South’s higher unemployment rate.
Italy is the largest wine producer in the world and one of the leaders of olive oil production. Other crops that exist on Italian farms, North and South include:
- Sugar beets
Southern Italy is also known for its citrus and fruits in addition to grapes and olives. Overall, agriculture only contributes to 1% of the nation’s GDP and is hampered by Italy’s underground economy.
Italy’s Underground Economy
Italy has made great strides in trying to curb its underground economy, although some experts think it contributes 15% of the country’s GDP. The darker side of the economy of Italy is prevalent in agriculture, service industry and construction. The Italian government has tried to make changes in graft and other contributors to the black market, as well as create more employment opportunities for women and young men. They have made improvements, but the economic crisis that hit the rest of the world had an impact on Italy as well.
Current Economic Issues
The global economic crisis has hit Italy with high unemployment and financial issues. The national unemployment rate rose from 6% in 2008 to about 8.4% in 2010. The nation has suffered from high public debt that amounts to over 100% of its GDP. The Italian government has tried to curb spending, but the high debt issues make this difficult.
Overall, the economy of Italy is the 8th largest in the world and the 4th largest in Europe in terms of its Gross Domestic Product. In terms of purchasing power or PPP, Italy is the 5th largest in Europe and ranks as the 10th largest globally.
Imports and Exports
Italy ranks 8th in the world for its imports and 9th for its exports. Italy’s export partners include Germany, France, Spain, China, Spain and Russia. As part of the European Union (EU), Italy has special relationships with member nations, especial in terms of its Wine exports.
Italy’s largest imports include:
- Engineering products
- Transport equipment
- Energy Products
- Production machinery
Italy’s largest exports include:
Italy’s imports cost the country about $473 billion dollars a year, and its exports generate about $448 billion dollars in revenue.
The economy of Italy has through tough economic hardships similar to the other nations of the world due to global financial issues that began in 2008. The major strains on the country come from unemployment, national debt and the underground economy, which seems to hurt even while it helps. Over time, the unemployment rate will be the most detrimental drain on Italy’s economy.