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Italy Political, Economic, and Social Conditions 2012 and Beyond

Updated on March 9, 2012

Italy Flag

Map of Italy

This hub provides an abbreviated country profile of Italy. In late 2011, Italy came under intense scrutiny due to adverse economic conditions. This scrutiny was led by other European Union members due to Italy's large public debt. At the time, Italy ranked as the Eurozone (EU15) 3rd largest economy and the EU27 fourth largest economy. The EU had already provided large bailouts of Ireland and Greece and faced the prospect of further bailouts for Portugal and Spain. The possibility of economic collapse in Italy led to the voluntary, but sudden departure of Italian prime minister Silvio Berlusconi in early November 2011.

Geographic Location

Italy is the boot-shaped territory located in Southern Europe. Italy covers just over 116,000 square miles (301,000 sq. kilometers) including the islands of Sardinia and Sicily. It is bordered on the north by France, Switzerland, Austria, and Solvenia. Most of the country is surrounded by seas including the Ligurian Sea, on the west; the Mediterannean Sea, on the southwest and south; the Ionian Sea, on the southeast; and the Adriatic Sea, on the east. Italy also surrounds two independent nations including the Vatican City (home to the Pope and the Roman Catholic holy city) and San Marino.

According to CultureGrams, Italy has a diverse set of natural landscapes. Those landscapes include alpine mountains in the north and pristine beaches on the coastlines. Temperatures range from Alpine conditions in the north to hot and dry in the south.

Rome is the capital city of Italy. Italy's three largest cities include Rome on the central west coast with 2.47 million; Milan in the north with 1.33 million; and Naples on the lower west coast with 953,000.

General Population and Demographic Data

The three graphs below this module depict some of Italy's general population and related demographic data projected to 2030. As of 2010, Italy was home to nearly 60 million inhabitants. The Life Expectancy rate is approximately 81 years (78 for men; 84 women). Infant mortality was less than 4 per 1,000 live births.

Ethnic groups represented in Italy's population included Italian, 95%; German, 1%; French, Albanian, Slovenian, and Greek, around .5% each. Religious affiliation is Roman Catholic, 98% and Protestant, Jewish, and Muslim communities less than 2% combined.

Italy Population Data

Political Structure

According to the Euromonitor 2011 country report,

In 1946, Italy abolished the monarchy and instituted a republic. The president is elected by parliament and 58 regional representatives for a seven-year term and exercises only semi-executive functions. The president then appoints the prime minister. The Chamber of Deputies (Lower House) has 630-members, elected for five-year terms by universal suffrage through a system of proportional representation. The Senate (Upper House) has 315 members; all but seven are also elected by proportional representation.

The current president of Italy is Giorgio Napolitano. Mario Monti replaced Silvio Berlusconi as Prime Minister in November 2011.


Political Outlook 2011 and Beyond

According to professional analysts from the Economist Intelligence Unit, concern grew in November 2011 about Italy’s ability to service its debt, avoid financial meltdown, and remain a member in the euro zone. In the wake of such concern, Italy Prime Minister Silvio Berlusconi lost support and resigned suddenly, but voluntarily. Italian president, Giorgio Napolitano, moved swiftly to Mario Monti in Berlusconi’s stead. Mario Monti is a former EU commissioner and president of Bocconi University. As prime minister, Monti won broad support with votes of confidence from parties across the political spectrum. This support came from within both houses of parliament, but is fragile even if broad. The Economist Intelligence Unit’s central forecast is that Monti will retain office until April 2013 when the current parliamentary term comes to an end. However, there is considerable risk along the horizon that he will not do so. The EIU outlined three major aims set by Mario Monti during the short-term limited period ahead. Those three aims included: (a) to eliminate the government deficit; (b) reduce government debt substantially; and (c) reform the economy to enable renewed growth after a long period of near-stagnation. According to the Economist analysts, (a) eliminating the government debt will require further painful spending cuts and tax rises beyond those recently passed by parliament; (b) reducing government debt may be partly achieved with privatisation, but may only be possible through a controversial wealth tax; and (c) reforming the economy will require overturning long-term entrenched trades and professions that have established considerable barriers to protect themselves against competition from new entrants. The Economist staff foresees.a wealth tax and reducing privileges of professions.could draw opposition on the right, while reducing the privileges of trade union members will provoke opposition on the left. All these things will serve as a political minefield for Prime Minister Mario Monti and will make political scene in Italy highly tenuous.

The graphs presented were created through International Futures forecasting software which draws from most of the major political and econonic intelligence sources worldwide. As shown in the graphs, on a scale of 0 to 5, Italy's governance effectiveness scores at the low end for an advanced economy in the euro zone. Italy's level of corruption as measured by Transparency International is in the medium range, but on the high side for an advanced economy of Europe.

Italy Political and Governance Data

Italy Economic Outlook 2012 and Beyond

According to the Euromonitor, Italy's 2011 recovery was rather weak. Over spending created a debt load careening out of control. Public debt (as a share of GDP) is second only to that of Greece within the EU and could rise if additional reforms are not introduced. Italy’s public debt led to a downgrade of its debt security rating and was forced to offer its bonds at unsustainable interest rates. Italy's GDP per capita has been relatively stagnant over the last ten years; ranking as one of the worst performances among advanced economies in the world. Adding to the bumpy road ahead, Italy is burdened with the third oldest population in the world which could further dampen its prospects of economic growth in the future.

The Economist Intelligence Unit forecasted the following three points for Italy’s economic future:

  • Italy faces a major risk that investor concerns about its debt burden and weak economic growth will continue to push up interest rates, which could make debt-servicing costs and membership of the euro zone unsustainable.
  • Italy will realize modest growth over in 2012 and 2013, but GDP will contract slightly in 2012 due to fiscal tightening in both domestic and main export markets, but will trend up gradually to around 1% a year in 2014-16.
  • Inflation will slow from an average of 2.8% in 2011 to about 2% in 2012-13 due to lower commodity prices and weak domestic demand (an EU harmonized measure), before it rises to about 2.5% a year in 2014-16.

According to the forecasts from International Futures (depicted in the graphs below),

  • GDP and GDP per capita are expected to advance at a snail's pace over the next 10 to 20 years. This is probably due to a forecasted reduction in the workforce because of its aging population.
  • Manufacturing is expected to remain Italy's chief economic sector.
  • Italy's public debt to GDP ratio is expected to remain high at around 100% of GDP.



Italy Economic Indicators

Italy Social Outlook

The graphs presented below depict some social factors in Italy. The graphs were prepared using IFs software. As depicted in the graphs, Italians enjoy a relatively moderate degree of economic freedom. In regards to education, a high percentage of Italian children graduate from secondary school and 55% of males and 73% of females attend college. Italy also boasts a relatively high degree of gender empowerment.

Social Indicators

Comments

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    • profile image

      Sam Danner 

      6 years ago

      I can not understand why the Europeans expect cradle to Grave entitlements with 6 week vacations and low retirements and such a poor work ethic. I am an American living in Australia and the Aussies are not much better. People think that there nations owe them a living. We will all have to pay for there indulgences.

    • ecoggins profile imageAUTHOR

      ecoggins 

      6 years ago from Corona, California

      charmike4, thank you for your comments. I agree. If Italy's economy collapses completely the domino effect would send shock waves through the global economy that would be devastating to nearly all.

    • charmike4 profile image

      Michael Kromwyk 

      6 years ago from Adelaide, South Australia

      We got to hope that Italy doesn't fail during 2012 otherwise we could have another GFC around the corner. Thanks for this insight into the current economic trends in Italy.

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