Sunday, 14 April 2013
The economy of Italy
We are in Italy, my favorite country. I go every year to Italy because I find this the most beautiful country in the world. This country offers beautiful coastlines, rich art, delicious cuisine, culture and ancient monuments. I am not the only one who finds this country attractive; I am just one of the 46.1 million tourists a year. Italy is fifth most visited country in the world, behind France the United States, China and Spain.
I and my colleagues came by plane but normally I travel to Italy by car. It is also possible to get here by train. Once you arrived at Italy, it is very simple to reach any destination or building because Italy offers you a lot of transport opportunities: train, bus, car, boat, tram, motorcycle, local transport and bicycle. A car offers you the most freedom but we made use of the local transport to visit the buildings of which Liesbeth discussed in the previous blog post. I took a picture of the bus we used. Rare, no?
Tourism is one of Italy's fastest growing and most profitable industrial sectors although the economy of Italy is not going very well. Italy is a member of the Group of Eight, the European Union and the Organization for Economic Co-operation and Development. I did not think about the economy when I was in Toscane, Firenze, Rome and Puglia with my parents so I was excited to experience the financial side of this country. The economy of Italy is the fourth-largest in Europe. It is a diversified industrial economy with high gross domestic product per capita. You can divide Italy in two parts: a developed industrial north which is dominated by private companies and a less-developed and agricultural south, with high unemployment. The Italian economy of the north is driven in large part by medium-sized enterprises. Many of them are family owned.
Although we experience a lot of rich-looking Italians on the streets, we got to know that the public debt has increased steadily since 2007. In 2010, Italian public debt was the second biggest debt ratio after Greece. This is a general problem because last month, the European Commission warned that unemployment in Europe is extremely high and will show social consequences very soon. The debts are not the only issue of Italy because the country is in recession since 2011 and it is not expected to know any growth until the second half of 2013. The government has undertaken, of course, measures to balance its budget and decrease its public debt. These measures included a boost in the value-added tax, pension reforms and cuts to public administration but it was not enough. There is a weak domestic demand and a fall in inventories.
We can conclude that the economy of Italy is shrinking more than anyone thought and that it is only going to get worse; in 2012 economic growth and labor market conditions got worse, with growth at -2.3% and unemployment rising to 11%.
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Three relevant real-life examples: