Economy—overview: Since World War II, the Italian economy has changed from one based on agriculture into a ranking industrial economy, with approximately the same total and per capita output as France and the UK. This basically capitalistic economy is still divided into a developed industrial north, dominated by private companies, and a less developed agricultural south, with large public enterprises and more than 20% unemployment. Most raw materials needed by industry and over 75% of energy requirements must be imported. In the second half of 1992, Rome became unsettled by the prospect of not qualifying to participate in EU plans for economic and monetary union later in the decade; thus, it finally began to address its huge fiscal imbalances. Subsequently, the government has adopted fairly stringent budgets, abandoned its inflationary wage indexation system, and started to scale back its generous social welfare programs, including pension and health care benefits. In December 1998, Italy adopted a budget compliant with the requirements of the European Monetary Union (EMU); representatives of government, labor, and employers agreed to an update of the 1993 "social pact," which has been widely credited with having brought Italy's inflation into conformity with EMU requirements. In 1999, Italy must adjust to the loss of an independent monetary policy, which it has used quite liberally in the past to help cope with external shocks. Italy also must work to stimulate employment, promote wage flexibility, and tackle the informal economy.

GDP: purchasing power parity—$1.181 trillion (1998 est.)

GDP—real growth rate: 1.5% (1998 est.)

GDP—per capita: purchasing power parity—$20,800 (1998 est.)

GDP—composition by sector:
agriculture: 3.3%
industry: 33%
services: 63.7% (1994)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: 2.9%
highest 10%: 23.7% (1991)

Inflation rate (consumer prices): 1.8% (1998 est.)

Labor force: 23.193 million

Labor force—by occupation: services 61%, industry 32%, agriculture 7% (1996)

Unemployment rate: 12.5% (1998 est.)

Budget:
revenues: $559 billion
expenditures: $589 billion, including capital expenditures of $NA (1998 est.)

Industries: tourism, machinery, iron and steel, chemicals, food processing, textiles, motor vehicles, clothing, footwear, ceramics

Industrial production growth rate: 0.5% (1996 est.)

Electricity—production: 226.707 billion kWh (1996)

Electricity—production by source:
fossil fuel: 80.02%
hydro: 18.25%
nuclear: 0%
other: 1.73%

Electricity—consumption: 264.007 billion kWh (1996)

Electricity—exports: 800 million kWh (1996)

Electricity—imports: 38.1 billion kWh (1996)

Agriculture—products: fruits, vegetables, grapes, potatoes, sugar beets, soybeans, grain, olives; beef, dairy products; fish

Exports: $243 billion (f.o.b., 1998)

Exports—commodities: engineering products, textiles and clothing, production machinery, motor vehicles, transport equipment, chemicals; food, beverages and tobacco; minerals and nonferrous metals

Exports—partners: Germany 16.4%, France 12.2%, US 7.9%, UK 7.1%, Spain 5.2%, Netherlands 2.8% (1997)

Imports: $202 billion (f.o.b., 1998)

Imports—commodities: engineering products, chemicals, transport equipment, energy products, minerals and nonferrous metals, textiles and clothing; food, beverages and tobacco

Imports—partners: Germany 18.0%, France 13.2%, UK 6.7%, Netherlands 6.2%, US 5.0%, Belgium-Luxembourg 4.7% (1997)

Debt—external: $45 billion (1996 est.)

Economic aid—donor: ODA, $1.6 billion (1995)

Currency: 1 Italian lira (Lit) = 100 centesimi

Exchange rates: Italian lire (Lit) per US$1—1,688.7 (January 1999), 1,736.2 (1998), 1,703.1 (1997), 1,542.9 (1996), 1,628.9 (1995), 1,612.4 (1994)
note: on 1 January 1999, the European Union introduced a common currency that is now being used by financial institutions in some member countries at the rate of 0.8597 euros per US$ and a fixed rate of 1,936.27 lire per euro; the euro will replace the local currency in consenting countries for all transactions in 2002

Fiscal year: calendar year

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