Italy: country overview22 June 2012
by Ina Dimireva -- last modified 12 February 2013
Italy has a diversified industrial economy, which is divided into a developed industrial north, dominated by private companies, and a less-developed, welfare-dependent, agricultural south, with high unemployment.
Year of EU entry: Founding member (1952)
Member of Schengen area: Yes
Political system: Republic
Capital city: Rome
Total area: 301 263 km²
Population: 61.3 million
Listen to the official EU language: Italian
Country overviewItaly is mainly mountainous, except for the Po plain in the north, and runs from the Alps to the central Mediterranean Sea. It includes the islands of Sicily, Sardinia, Elba and about 70 other smaller ones. There are two small independent states within peninsular Italy: the Vatican City in Rome, and the Republic of San Marino.
Italy has a two-chamber parliament, consisting of the Senate (Senato della Repubblica) or upper house and the Chamber of Deputies (Camera dei Deputati). Elections take place every five years.
The country’s main economic sectors are tourism, fashion, engineering, chemicals, motor vehicles and food. Italy's northern regions are per capita amongst the richest in Europe.
The centre of the vast Roman Empire which left a huge archaeological, cultural and literary heritage, the Italian peninsula saw the birth of medieval humanism and the Renaissance. This further helped to shape European political thought, philosophy and art via figures like Machiavelli, Dante, Leonardo da Vinci and Galileo.
The list of famous Italian artists is long and includes Giotto, Botticelli, Leonardo, Michelangelo, Tintoretto and Caravaggio. The country has also produced opera composers such as Verdi and Puccini and film-maker Federico Fellini.
Italian cuisine is one of the most refined and varied in Europe, from the piquant flavours of Naples and Calabria to the pesto dishes of Liguria and the cheese and risotto dishes of the Italian Alps.
Italy has a diversified industrial economy, which is divided into a developed industrial north, dominated by private companies, and a less-developed, highly subsidized, agricultural south, with high unemployment. The Italian economy is driven in large part by the manufacture of high-quality consumer goods produced by small and medium-sized enterprises, many of them family owned. Italy also has a sizable underground economy, which by some estimates accounts for as much as 17% of GDP. These activities are most common within the agriculture, construction, and service sectors. Italy is the third-largest economy in the euro-zone, but its exceptionally high public debt and structural impediments to growth have rendered it vulnerable to scrutiny by financial markets. Public debt has increased steadily since 2007, topping 126% of GDP in 2012, and investor concerns about the broader euro-zone crisis at times have caused borrowing costs on sovereign government debt to rise to euro-era records. During the second half of 2011 the government passed a series of three austerity packages to balance its budget and decrease its public debt. These measures included a hike in the value-added tax, pension reforms, and cuts to public administration. The government also faces pressure from investors and European partners to sustain its recent efforts to address Italy's long-standing structural impediments to growth, such as an inflexible labor market and widespread tax evasion. In 2012 economic growth and labor market conditions deteriorated, with growth at -2.3% and unemployment rising to nearly 11%. Although the government has undertaken several economic reform iniatiatives, in the longer-term Italy's low fertility rate, productivity, and foreign investment will increasingly strain its economy. Italy's GDP is now 7% below its 2007 pre-crisis level.
Source: European Commission, CIA - The World Factbook