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1、 Country Analysis Report: Italy Published 07/2011 Datamonitor. This brief is a licensed product and is not to be photocopied Page 1 OVERVIEW Catalyst This profile analyzes the political, economic, social, technological, legal, and environmental (PESTLE) structure in Italy. Each of the PESTLE factors
2、 is explored on four parameters: current strengths, current challenges, future prospects, and future risks. Summary Key findings The government has a majority in parliament, but coalition pressures remain a threat to political stability The People of Freedom Party is the center-right political allia
3、nce led by the current Prime Minister Silvio Berlusconi. The party won the 2008 election with 37.5% of votes in its favor, giving it a majority in parliament and providing a degree of stability which has historically been rare in Italian politics. With the support of the Northern League and the Move
4、ment for Autonomy parties, the government has 47% of the seats in the lower house of parliament, which is known as the Chamber of Deputies. However, the government faces many challenges to its stability. The prime ministers approval ratings have plunged due to infighting among his allies, an unstabl
5、e economy, the countrys participation in the Libya conflict, and numerous allegations of sexual and financial fraud. The countrys fiscal situation is in a fragile state and the recessionary trend is getting deeper. Coalition pressures could damage government reforms, while constant bickering among t
6、he coalition partners on policies could lead to further instability in the country. Italy is a large economy, but poor government finances will have serious implications Italys economy is one of the largest in the world, recording gross domestic product (GDP) of $1.13tn in 2010. According to the Int
7、ernational Monetary Fund, the country is the 10th largest economy in the world based on purchasing power parity. COUNTRY ANALYSIS REPORT Italy In-depth PESTLE insights Publication Date: July 2011 Overview Country Analysis Report: Italy Published 07/2011 Datamonitor. This brief is a licensed product
8、and is not to be photocopied Page 2 According to the seasonally adjusted manufacturing firms confidence index compiled by the Institute of Economic Studies and Analyses, the business confidence index reached pre-crisis levels in November 2010. However, Italys budget deficit shot up to 4.8% of GDP in
9、 2009, with a 5.5% decline in revenues and a 1.2% increase in current expenditure. In 2010, the country again registered a budget deficit of just under 5%. Although Italy is the third largest economy in the eurozone, it is on the verge of a debt crisis as it has been unable to tackle its high debt o
10、f approximately 119% of GDP. Meanwhile, slow economic growth has averaged around 0.3% between 2001 and 2010. The government must improve its public finances and reduce its budget deficit and public debt in order to regain its competitiveness and strength in the markets. Human development is high in
11、the country, but the challenges of uneven development and an aging population loom large Italys human development has been high based on its well-developed social system. According to the United Nations Development Programs Human Development Index for 2010, Italy is ranked among the countries with v
12、ery high human development. With its socialist traditions, the country has provided an extensive social security and welfare system that covers the majority of the population. The country has provided good healthcare infrastructure to its population and has a literacy rate of around 99%. However, de
13、velopment has not been uniform. Northern Italy is more developed than southern Italy, where unemployment and school dropout rates are significantly higher. In 2010, more than 4% of the population survived on less than $2 a day. In July 2011, the Italian National Institute of Statistics reported that
14、 20% of Italian families have incomes below the poverty line. The government has earmarked many projects for social inclusion to tackle uneven growth and poverty. Meanwhile, the median age of the population rose by around six years between 1991 and 2010. With a declining birth rate Italy is facing t
15、he grim situation of having one of the fastest aging populations in Europe, which will only increase the pressure on the social security system. Low R food, beverages and tobacco; minerals and nonferrous metals Imports Engineering products, chemicals, transport equipment, energy products, minerals a
16、nd nonferrous metals, and textiles and clothing; food, beverages and tobacco Source: Central Intelligence Agency (CIA) D A T A M O N I T O R Key Facts and Geographic Location Country Analysis Report: Italy Published 07/2011 Datamonitor. This brief is a licensed product and is not to be photocopied P
17、age 11 Geographical location Italy is located in Southern Europe. It is a peninsula extending into the central Mediterranean Sea, towards northeast Tunisia. It is surrounded by the Adriatic, the Ionian, and the Tyrrhenian seas. Figure 1: Map of Italy Source: CIA, The World Factbook D A T A M O N I T
18、 O R PESTLE Analysis Country Analysis Report: Italy Published 07/2011 Datamonitor. This brief is a licensed product and is not to be photocopied Page 12 PESTLE ANALYSIS Summary Italy has a republican form of government, governed on principles set out in the 1948 constitution. The political scene is
19、dominated by a number of parties with diverse ideologies. Under the leadership of Silvio Berlusconi, the present government represents the center-right ideology. Although Berlusconis government commands a majority in parliament, economic recession poses a serious challenge to its influence. Added to
20、 this, the compulsions of coalition politics may prove to be a hindrance to reforms. Meanwhile, the poor state of government finances and perceived high levels of corruption could derail development in the country. Although Italy is the third largest economy in the eurozone with GDP of $1.13tn in 20
21、10, the poor state of government finances and slow economic growth could have serious implications on the country. Italy has been ranked among those countries with very high human development, but this varies across regions. Northern Italy is more developed than southern Italy, where unemployment an
22、d school dropout rates are significantly higher. The country also suffers from high poverty levels and an aging population, which only increase the pressure on the social security system. In matters of technology and the environment, Italy needs to catch up with its European counterparts. Expenditur
23、e on R 400m ($531.2m) for supporting industrial policies; 4.3bn ($5.7bn) on education to strengthen skills development and improve the quality of education and training systems to increase labor-market participation; 20.8bn ($27.6bn) for technological R and 4bn ($5.6bn) for the development of renewa
24、ble energy and energy efficiency. In June 2011, the government also reaffirmed its plan to return to a balanced budget by 2014. A four-year austerity budget worth 40bn ($56.2bn) was announced in July 2011 to cut its deficit. All these efforts and initiatives are aimed at bringing the economy back to
25、 robust growth. Rising trade with non-EU countries The majority of Italys trade is with other EU member states, which accounted for 56% of total trade in April 2011. However, non-EU countries registered higher growth. Compared to April 2010, exports and imports to EU countries increased by 9.4% and
26、13.4% respectively in April 2011. However, exports and imports to non-EU countries increased by 17.7% and 30.0% respectively in April 2011. Among all the export destinations, the highest growth was recorded in Central and South America (47.2%), the US (40.4%), ASEAN countries (Brunei Darussalam, Cam
27、bodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam 30.9%), Switzerland (26.1%), Turkey (25.8%), and India (22.6%). Among all the import destinations, the highest growth was recorded in the Middle East (66.2%), India (55.2%), China (43.6%), Turkey (38.7%), Ru
28、ssia (35.1%), and the US (33.6%). Future risks Eurozone debt crisis Although Italy is the third largest economy in the eurozone, it is on the verge of a debt crisis over market fears that the country is doing too little to tackle its high debt of around 120% of GDP and slow economic growth, which av
29、eraged around 0.3% between 2001 and 2010. Under new EU stipulations the country is expected to reduce its debt by 3% annually from 2013. The high public debt and slow economic growth could lead to investors losing their confidence and dumping Italian bonds and stocks over fears that the country coul
30、d be plagued with a eurozone debt crisis similar to that of Greece, Portugal, and Ireland. Fears are rising in the market that the country is too big for a bailout in the event of a debt crisis. Italian banks are also experiencing a steady decline in their asset quality, which does not augur well fo
31、r the resilience of the Italian economy against a debt crisis. With nearly half of Italys sovereign debt owned by international investors, there is a greater sense of nervousness in the market over the economic situation in the country. Italian public debt amounted to 1.89tn ($2.66tn) in April 2011,
32、 an increase of 75.2bn ($105.7bn) from April 2010. The increasing public debt will be an obstacle for the government to make strong investments in public infrastructure development. PESTLE Analysis Country Analysis Report: Italy Published 07/2011 Datamonitor. This brief is a licensed product and is
33、not to be photocopied Page 19 Social analysis Overview According to the United Nations Development Programs Human Development Index (HDI) for 2010, Italy has been ranked among the countries with very high human development. This is indicative of the countrys well-developed social system. With its so
34、cialist traditions, Italy provides an extensive social security and welfare system which covers the majority of the population. The country also has good healthcare infrastructure and a literacy rate of around 99%. Italys healthcare system is among the best in the world, and the public sector has ta
35、ken the lead in providing healthcare and education services. However, development has not been uniform. Northern Italy is more developed than southern Italy, where unemployment and school dropout rates are significantly higher. In 2010, more than 4% of the population survived on less than $2 a day.
36、In July 2011, the Italian National Institute of Statistics reported that 20% of Italian families have incomes below the poverty line. The government has earmarked many projects for social inclusion to tackle uneven growth and poverty. Meanwhile, the median age of the population rose by around six ye
37、ars between 1991 and 2010. With a declining birth rate Italy is facing the grim situation of having one of the fastest aging populations in Europe, which will only increase the pressure on the social security system. Table 5: Analysis of Italys social system Current strengths Current challenges A st
38、rong social security system High human development indicators North-south disparity in development Growing disparity in income Future prospects Future risks Social inclusion programs Measures to tackle low labor force participation Rising unemployment The fiscal sustainability of social security pro
39、grams Source: Datamonitor D A T A M O N I T O R Current strengths A strong social security system Italy has an extensive social security and welfare system that provides coverage to most of its citizens. The National Social Security Institute is responsible for the implementation of social security
40、provisions. Social security activities are carried out by agencies at both regional and local levels, but overall co-ordination has been retained by the national government to ensure uniform implementation across the country. Social insurance provides benefits for unemployment, sickness, maternity,
41、accidents at work, and occupational diseases, as well as old age, invalidity, survivors pensions, and family allowances. The extension of universal healthcare coverage is also an important feature of the Italian healthcare system. PESTLE Analysis Country Analysis Report: Italy Published 07/2011 Data
42、monitor. This brief is a licensed product and is not to be photocopied Page 20 High human development indicators Italy has performed well on various human development indicators. In 2010 the United Nations Development Programmes Human Development Index ranking for Italy was 23 with a score of 0.854,
43、 which placed it among the countries with very high human development. In 2010, average life expectancy stood at 81.77 years (79.16 years for men and 84.53 for women), which is one of the highest in the world. The infant mortality rate has fallen from six per 1,000 births in 1997 to three per 1,000
44、births in 2010. Furthermore, the country has good healthcare infrastructure and a literacy rate of around 99%. The above indicators demonstrate Italys ability to create a healthy climate for social development. Current challenges North-south disparity in development Northern Italy is more developed
45、than southern Italy. The employment rate in southern Italy is around 45%, which is 20 percentage points lower than the central and northern regions. Unemployment is significantly high among young people. Southern Italy also suffers from limited availability to essential public and network services f
46、or development. Dropout rates from upper secondary and higher education are high in the southern regions, where 25% of young people have not completed any professional training, compared to 16.7% in other regions. The proportion of families facing irregularities in water distribution was around 21%
47、in southern Italy, compared to around 6% in northern Italy. The overall development of the country is the only way that the government can sustain a high human development ranking. Growing disparity in income Italy has witnessed an increasing disparity of income. During the 1980s and 1990s, income d
48、isparities increased by more than 12%. Membership in the EU has hardly improved the level of income for the Italian population, the majority of which (53%) survives on less than $20,000 a year. In 2010, more than 4% of the population survived on less than $2 a day. In July 2011 the Italian National
49、Institute of Statistics reported that 20% of Italian families have incomes below the poverty line. About 14% of the population, or 8 million people, were classified as poor. According to the institute, 50% of the large families in southern Italy were classified as poor. The economic slowdown of the country may further widen the income distribution gap. Future prospects Social inclusion programs The government has earmarked 3.9bn ($5.2bn) for social inclusion projects, a large proportion of which will be directe