Italy Is Not an Economic Basket Case
The predictions of Italy's downfall are greatly exaggerated.
October 13, 2011 - 12:00 am
At a time when Europe’s future, and even its financial present, has been called into question, the fact that the picture is in some ways gloomy does not mean that the malady is irreversible. Despite its very real problems, Italy is a case in point. In fact, the country is moving toward recovery.
Undeniably, Italy is plagued with government corruption and, given the stagnation of its population growth, an aging of the population. Back in 2009, at the height of this financial crisis, GDP in Italy had fallen by an incredible 6.8 percent. During the same period, other major economic indicators were terrible.
Yet today, the situation looks far better. According to Confindustria, there is a set of positive elements to take into consideration when it comes to the future of Italians. First and foremost: Italy’s GDP has been growing at a 0.30 percent rate during the last two years or so. It is more or less the same growth rate that Italy has experienced since 1981.
This is not surprising because, according to the World Bank, Italy is still a “high income” country. In Europe, it is the fourth largest in population with almost 61 million and, with a GDP of $2.11 trillion, it is the fourth-largest economy on the continent. With regards to GDP, Italy is considered the eighth richest country in the world (Brazil, with a population of roughly 200 hundred million, is the seventh).
Life expectancy at birth is 81 years: Italians live longer than Americans (78.9). GDP per capita in Italy is $35,084: higher than Spain, lower than France. At purchasing power parity, we are the 29th country in the world in terms of GDP per capita.
According to the last Confindustria survey on the state of Italian economy, exports have been rising by 6.7% and 5.1% respectively in 2010 and 2011; this would be thanks to the intensification of world trade (+17% since March 2010). Exports have always been our best bet: our politicians found out by the 1980s that devaluing the lira actually meant boosting foreign trade.
All and all, according to Confindustria, when you take into consideration the Italian economic situation as a whole, “the fear of markets appears to be exaggerated.” Consumption will most probably continue to grow in Italy (even though at a sluggish pace: +0.4% / 0.7%) during the next two or three quarters (this trend being in line with shaky labor market conditions and family income).