The Italian economy is one of the world's major economies, and its main industries are tourism, commerce, communications, chemicals, machinery, car manufacture, food, textiles, clothing, footwear and ceramics. According to the International Monetary Fund, in 2008 Italy was the seventh-largest economy in the world and the fourth-largest in Europe. Italy belongs to the Group of Eight (G8) industrialized nations, it is a member of the European Union, OECD, and the Group of Seven (G7).
The Italy is divided into a developed industrial north dominated by large private companies and an agricultural, state-assisted south. In the post-war period, Italy was transformed from a weak, agricultural based economy into one of the world's most industrialized nations, even so that in 1987, the Italian economy beat the British economy, by GDP (nominal), an event known to the Italians as 'il sorpasso (economics)' .
According to the World Bank, Italy has high levels of freedom for investments, business and trade. Italy has the world's 6th (7th including the European Union) highest exports, that of US$ 546,900,000,000 (est.) in 2008. Italy, also, has the world's 24th highest oil exports, which was US$ 521,400 in 2004, even beating Germany and France. Also, the country exports and produces the highest level of wine, exporting over 1,793 tonnes. Italy was responsible for producing approximately one-fifth of world wine production in 2005.
Italy is a developed country, and, according to The Economist, has the world's 8th highest quality of life. The country enjoys a very high standard of living, and is the world's 19th most developed country, even beating the UK and Greece Also, the cities of Milan and Rome are major European financial and political centres. The Milan metropolitan area has Europe's 4th highest GDP (nominal), $312 (€241) billion, and the Rome metropolitan area has a GDP of €109 billion. Milan and Rome are also the world's 11th and 18th (respectively) most expensive cities in the world. Milan is Europe's 26th richest city by purchasing power in 2009, with a GDP of $115 billion.
Milan has one of Europe's highest GDP (per capita), about €35,137 (US$ 52,263), which is 161.6% of the EU average GDP per capita, whilst Rome had a 2003 GDP per capita of €29,153 (US$ 37,412), which was second in Italy, (after Milan), and is more than 134.1% of the EU average GDP per capita. Even Naples, in southern Italy, which is characterized by high levels of unemployment and organized crime, is the world's 91st richest city by purchasing power, with a GDP of $43 billion and even beating Bucharest and Zurich by absolute GDP terms.
During the 1950s and 60s, Italy saw a transformation from being a weak, agricultural-based economy into one of the world's leading industrialized nations, an event known as the "Italian economic miracle", (or 'il boom'). Even American President John F. Kennedy, on his 1963 1-2 July visit to Rome and Naples, praised Italy's economic growth, on a dinner with the Italian President of the time, Antonio Segni. Migrants from the poor south came to the leading industrial centres of Italy, Milan, Turin and Genoa, and these cities started to open up more factories and industrial districts. The release of the new Fiat 500 and the construction of the Pirelli Tower in Milan, were all events which symbolized Italy's growing economy. Also, in 1964 onwards, Italy's GDP grew at an average of +8% every year.
Since the 1940s, 50s, 60s and 70s, the economy of southern Italy has had a remarkable growth. Unemployment has been decreasing, since the 2003 contreversial "Biagi law", as unemployment in Campania has fallen from 23.7% in 1999 to 11.2% in 2007, and in Sicily from 24.5% to 13% .
However, the country's economy suffers from many problems. During the last decade the average annual growth was 1.23% in comparison to an average EU annual growth rate of 2.28%.Italy has often been referred the sick man of Europe, characterised by economic stagnation, political instability and problems in pursuing reform programs. However, according to the last Eurostat data, Italian per capita GDP at purchasing power parity remains approximately equal to the EU average.
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)
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 Euro-zone.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. 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.
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. I
taly'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).