Skyline of Florence, Italy

Italy Economy

Italy economic overview

Waning economic relevance:

Italy's economy—the Eurozone's third largest—has languished in recent years. In 2010, the country's GDP was roughly three-quarters that of France's; by 2022, that figure slipped to less than two-thirds. A declining population, a high stock of debt, a rigid jobs market and copious red tape all hold back momentum. Conditions vary considerably by region, with the south lagging far behind the more dynamic north in terms of economic growth and job creation.

Industrial strength:

Italy's industrial sector is still important to its economy, despite having lost clout over the last few decades as a share of GDP. Italy boasts particular strengths in automotive, pharmaceuticals, machinery, fashion and luxury goods. Global brands like Fiat, Ferrari, and Luxottica exemplify Italy's reputation for quality and design.

Tourism hotspot:

The services sector, including tourism, banking, and retail, plays a significant role in Italy's economy. Italy's rich cultural heritage and scenic beauty make it one of the world's top tourist destinations, significantly contributing to national revenue. The banking and finance sector, centered in Milan, is also important to the economy.

Myriad challenges:

Italy faces several economic challenges, including slow growth rates and one of the highest public debt levels in the world. Structural issues such as labor market rigidity, bureaucratic inefficiency, and a complex tax system contribute to these challenges. Addressing these issues is critical for sustainable economic growth.

Meager economic prospects:

In the coming years, large inflows of EU funding will support activity. However, comprehensive structural reforms to boost the country's meager potential growth rate are unlikely; as such, Italy will continue to lose economic clout relative to other Eurozone members over our forecast horizon.

Italy's economy in numbers:

Nominal GDP of USD 2,047 billion in 2022.

GDP per capita of USD 34,676 compared to the global average of USD 10,589.

Average real GDP growth of 0.3% over the last decade.

Share of the region's population
Share of the region's GDP

Economic structure:

In 2021, services accounted for 75% of overall GDP, manufacturing 15%, other industrial activity 8%, and agriculture 2%. Looking at GDP by expenditure, private consumption accounted for 58% of GDP in 2021, government consumption 20%, fixed investment 20%, and net exports 2%.

GDP by economic sector
GDP by type of expenditure

International trade:

In 2021, manufactured products made up 81% of total merchandise exports, mineral fuels 3%, food 10%, ores and metals 3% and agricultural raw materials 1%, with other categories accounting for 2% of the total. In the same period, manufactured products made up 67% of total merchandise imports, mineral fuels 13%, food 10%, ores and metals 6% and agricultural raw materials 2%, with other goods accounting for 2% of the total. Total exports were worth USD 623 billion in 2022, while total imports were USD 641 billion.

Key exports
Key imports
Key export partners
Key import partners

Economic growth:

The economy recorded average annual growth of 0.3% in the decade to 2022. To read more about GDP growth in Italy, go to our dedicated page.

Fiscal policy:

Italy's fiscal deficit averaged 4.2% of GDP in the decade to 2022. Find out more on our dedicated page.

Unemployment:

The unemployment rate averaged 10.8% in the decade to 2022. For more information on Italy's unemployment click here.

Inflation:

Inflation averaged 1.7% in the decade to 2022. Go to our Italy inflation page for extra insight.

Monetary Policy:

Euro Area monetary policy rate ended 2022 at 2.50%, up from 0.75% a decade earlier. See our Italy monetary policy page for additional details.

Exchange Rate:

From end-2012 to end-2022 the euro weakened by 18.2% vs the U.S. dollar. For more info on the euro, click here.
The economy expanded 0.3% in quarter-on-quarter terms in Q1 2024, accelerating from Q4 2023’s 0.1% increase. Domestic demand, including inventories, detracted from the final reading, while external demand made a positive contribution. The average stagnation recorded by month-on-month retail sales in January-March supports the picture of subdued domestic demand. Moving to the current quarter, our Consensus expects the economy to record a somewhat softer sequential expansion. In April, economic sentiment was slightly down from Q1’s average. Moreover, in the same month, the manufacturing PMI came in lower than in Q1. On the other hand, the services PMI showed a faster expansion in April than in the first quarter, while a tight labor market and low inflation are driving real wage growth, which should be providing some support to household spending.
Projections out to 2033.

55 indicators covered including both annual and quarterly frequencies.

Consensus Forecasts based on a panel of 50 expert analysts.

Want to get insight on the economic outlook for Italy in the coming years? FocusEconomics collects projections out to 2033 on 55 economic indicators for Italy from a panel of 50 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Italy economy. To download a sample report on the Italy's economy, click here . To get in touch with our team for more information, fill in the form at the bottom of this page .

Italy Economic Data

2018 2019 2020 2021 2022
Population (million) 59.9 59.8 59.6 59.2 59.0
GDP (EUR bn) 1,771 1,796 1,660 1,820 1,963
GDP per capita (EUR) 29,551 30,032 27,827 30,718 33,261
Economic Growth (Nominal GDP, ann. var. %) 1.9 1.4 -7.6 9.6 7.9
Economic Growth (GDP, ann. var. %) 0.8 0.5 -9.0 8.3 4.1
Domestic Demand (ann. var. %) 1.1 0.2 -8.0 7.4 5.0
Private Consumption (ann. var. %) 1.0 0.2 -10.4 5.5 4.9
Government Consumption (ann. var. %) 0.1 -0.6 0.1 1.4 1.0
Fixed Investment (ann. var. %) 2.8 1.2 -8.0 20.3 8.9
Exports (G&S, ann. var. %) 1.5 1.8 -14.3 14.1 11.0
Imports (G&S, ann. var. %) 2.8 -0.5 -12.7 15.6 13.5
Industrial Production (ann. var. %) 0.8 -1.2 -11.0 11.7 0.4
Retail Sales (ann. var. %) -0.4 0.7 -5.9 7.3 -0.1
Disposable Income (ann. var. %) 1.7 0.7 -2.3 4.7 5.8
Unemployment (% of active population, eop) 10.3 9.8 9.8 8.8 7.9
Unemployment (% of active population, aop) 10.6 9.9 9.3 9.5 8.1
Fiscal Balance (% of GDP) -2.2 -1.5 -9.4 -8.7 -8.6
Public Debt (% of GDP) 135 134 155 147 141
Inflation (CPI, ann. var. %, eop) 1.1 0.5 -0.2 3.9 11.6
Inflation (HICP, ann. var. %, eop) 1.1 0.4 -0.2 4.2 12.3
Inflation (HICP, ann. var. %, aop) 1.3 0.6 -0.1 2.0 8.7
Inflation (PPI, ann. var. %, aop) 3.3 0.2 -3.3 10.7 34.4
ECB Refinancing Rate (%, eop) 0.00 0.00 0.00 0.00 2.50
ECB Overnight Deposit Rate (%, eop) -0.40 -0.50 -0.50 -0.50 2.00
3-Month EURIBOR (%, eop) -0.31 -0.38 -0.55 -0.57 2.13
10-Year Bond Yield (%, eop) 2.74 1.40 0.55 1.17 4.67
Stock Market (var. of FTSE MIB %) -16.1 28.3 -5.4 23.0 -13.3
Exchange Rate (USD per EUR, eop) 1.14 1.12 1.22 1.14 1.07
Exchange Rate (USD per EUR, aop) 1.18 1.12 1.14 1.18 1.05
Current Account Balance (EUR bn) 46.1 58.6 64.5 43.3 -30.9
Current Account Balance (% of GDP) 2.6 3.3 3.9 2.4 -1.6
Merchandise Trade Balance (EUR bn) 45.9 60.7 68.3 48.6 -19.8
Foreign Direct Investment (EUR bn) 33.0 16.2 -19.3 -7.9 18.7

Q&A:

  1. What is the performance of the Italian economy?

  2. After a significant post-pandemic rebound, Italy's GDP growth has slowed. Challenges include high public debt and inflation, slow productivity growth, and regional disparities. The government focused on reforms and investment, particularly in green energy and digital infrastructure, to stimulate long-term growth.

  3. Why is Italy struggling economically?

  4. Italy's economic struggles stem from high public debt, slow productivity growth, and regional disparities. Additional challenges include an aging population and bureaucratic inefficiencies. These factors have constrained economic growth and recovery efforts.

  5. Does Italy have a strong economy?

  6. While Italy boasts the 3rd largest economy in the Euro area and a strong manufacturing sector, it also faces challenges such as high public debt, sluggish growth and structural rigidities.

  7. What is the main economic sector in Italy?

  8. Italy's main economic sector is services, which includes finance, tourism, and retail and comprises over 70% of GDP. This sector benefits from a strong tourism industry and a large and skilled workforce. Manufacturing, particularly in high-quality consumer goods like fashion, automotive, and machinery, also plays a crucial role in Italy's economic landscape.

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