Leaning tower in pieces?
Overview: Italian economy

The Italian economy registered a real GDP growth of 1.2% in the year 2004. After experiencing recession in the first quarter of 2005, the economy revived in the second quarter with GDP escalating to 0.7%. According to European Central Bank, recovery depends on reversing unfavourable trends in international competitiveness and public debt.

Foreign Trade: Exports and Imports

The Italian exports showed a remarkable recovery in 2004, after seeing negative growth in 2002 and 2003. They touched the mark of €359 billion, a surge of 7.1% over 2003. Imports aggregated to €349 billion in 2004, an increase of 6.3%. The main trading partners of Italy are Germany, France, UK and USA.

Balance Of Payments: Deficits

Italy’s position on the ‘balance of payments’ front is grave but it is improving slowly. The current account deficit stands at €7,454 million, while the capital account showed a mere €382 million surplus in 2005. The financial account ended showing a surplus of €8,279 million in 2005. The total external debt of Italy, as on September 2005, was €1.4 trillion. At the end of October 2005, the reserve assets of Italy amounted to €52 billion.

CPI: Cost of living

Cost of living measured by Consumer Price Index for all commodities, increased by 2% in the first quarter of March 2005, compared to a 2.3% increase in 2004. Energy prices were the main drivers of index, as energy products increased by massive 5.9% in March 2005 compared to just 2.4% in 2004. Processed foods experienced the second highest increase of 2.8% in March 2005 against 3.6% in 2004. For the entire Euro region, core inflation remained stable at 2% in 2004.