According to the International Monetary Fund, in 2008 Italy was the seventh-largest economy in the world and the fourth-largest in Europe. The country is divided into a developed industrial north dominated by large private companies and an agricultural, state-assisted south. During the last decade the average annual growth was 1.23% in comparison to an average EU annual growth rate of 2.28%.[54] Italy has often been referred the sick man of Europe,[55][56] characterised by economic stagnation, political instability and problems in pursuing reform programs.
Firstly, Italy suffers from structural weaknesses due to its geographical conformation and the lack of raw materials and energy resources. The territory is mostly mountainous, so much of the terrain is not suitable for intensive cultivation and communication is made more difficult. The energy sector is highly dependent on imports from abroad: in 2006 the country imported more than 86% of its total energy consumption (99.7% of the solid fuels demand, 92.5% of oil, 91.2% of natural gas and 15% of electricity)[57][58]
Secondly, the Italian economy is weakened by the lack of infrastructure development, market reforms and research investment. In the Index of Economic Freedom 2008, the country ranked 64th in the world and 29th in Europe, the lowest rating in the Eurozone. According to the World Bank, Italy has high levels of freedom for investments, business and trade. Despite this, the country has an inefficient state bureaucracy, low property rights protection and high levels of corruption, heavy taxation and public spending that accounts for about half of the national GDP.[59] In addition, the most recent data show that Italy's spending in R&D in 2006 was equal to 1.14% of GDP, below the EU average of 1.84% and the Lisbon Strategy target of devoting 3% of GDP to research and development activities.[60]
Thirdly, Italy has a smaller number of world-class multinational corporations than other economies of comparable size, but there are a large number of small and medium companies. This has produced a manufacturing sector often focused on the export of niche market and luxury products, capable of facing the competition from China and other emerging Asian economies based on lower labour costs.[61] Italy's major exports are motor vehicles (Fiat Group, Aprilia, Ducati, Piaggio); chemicals and petrochemicals (Eni); energy and electrical engineering (Enel, Edison); home appliances (Candy, Indesit), aerospace and defense technologies (Alenia, Agusta, Finmeccanica), firearms (Beretta), fashion (Armani, Valentino, Versace, Dolce & Gabbana, Roberto Cavalli, Benetton, Prada, Luxottica); food processing (Ferrero, Barilla Group, Martini & Rossi, Campari, Parmalat); sport and luxury vehicles (Ferrari, Maserati, Lamborghini, Pagani); yachts (Ferretti, Azimut).
Tourism is one of the fastest growing and most profitable sectors the national economy: with 43.7 million international tourist arrivals and total receipts estimated at $42.7 billion, Italy is the fifth major tourist destination and the fourth highest tourist earner in the world.
According to Eurostat data, Italian PPS GDP per capita stood approximately equal to the EU average in 2008.
