Posted February 09, 2021
Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
- Italy is the world’s 8th largest economy with a GDP of $2 trillion in 2019. Italy’s GDP grew by 0.3% in 2019.
- Covid has had a tremendous impact on the Italian economy. The European Union Commission estimates that Italy’s GDP will contract by 9.5% in 2020 as a result of the Covid pandemic and the lockdown imposed by the Italian Government. However, the Commission also estimates that Italy’s GDP will bounce back by 6.5% in 2021 propelled by the return of many economic activities in the country starting in May 2020 and by expected public stimulus measures.
- In 2019 Italy was the 19th largest market for U.S. exports, which totaled approximately $23.8 billion, and the 4th largest export market in the EU, following Germany, Netherlands and France. However, export values to the Netherlands (Rotterdam) and Belgium (Antwerp) are skewed by the ‘Rotterdam Effect’ where goods are valued at the port of entry, but then distributed throughout the EU.
- U.S. exports to Italy are concentrated in high-value sectors such as pharmaceutical products (17%), machinery (12%), and aircraft (7%).
- The United States remained by far Italy’s largest non-EU export market with roughly a 9% share of all non-EU exports. In 2019, the United States was
Italy’s third largest destination for exports, with U.S. imports from Italy totaling $57.2 billion, following Germany and France. The U.S. had a goods trade deficit with Italy valued at $33.4 billion in 2019.
- In 2018 Italian foreign direct investment in the U.S. totaled $38.6 billion, supporting 75,900 American jobs. Top industry sectors for Italian FDI include textiles, industrial equipment, consumer products automotive components, metals, and renewable energy.
- Italy’s cumulative inward FDI investment is well below the EU average due largely to structural problems, which affect domestic as well as foreign investment. U.S. direct investment in Italy totaled $30.70 billion in 2017, ranking Italy 8th in Europe, less than half of U.S. investment in France and one-fourth the size of U.S. FDI in Germany. U.S investment in Italy is concentrated in manufacturing, computer services and software, and energy, with significant industrial relationships in the aerospace and automotive sectors.
- The current Italian government was formed in September 2019, when the anti-establishment Five Star Movement and the center-left establishment Democratic Party formed a coalition government with two minor parties. Giuseppe Conte serves as Prime Minister and Sergio Matarella serves as President.
- Italy has a population of approximately 60 million. Industrial activity is concentrated in the north from Turin in the west through Milan to Venice in the east. This is one of the most industrialized and prosperous areas in the world and accounts for more than 50% of Italy’s national income. By contrast, Italy’s southern region, or “Mezzogiorno” is less developed.
- Small and medium-sized enterprises (SMEs) -many of them family-owned -comprise 99% of Italian businesses and produce 68% of Italy’s GDP.
- Italy’s SME sector has a higher proportion of firms employing fewer than ten people than the EU average. These companies contribute nearly half of total employment and one-third of value to the economy.
- Italy ranks 58 out of 190 countries in the World Bank Doing Business Report, and though its index score is gradually improving, it ranks 51 out of 176 countries in Transparency International’s Corruption Perception Index