REPORT ON ECONOMY OF ITALY

The economy of Italy is the 3rd-largest national

economy in the Eurozone, the 8th-largest by nominal
GDP in the world, and the 12th-largest by GDP (PPP).
Italy has a major advanced economy, and is a founding
member of the European Union, the Eurozone, the
OECD, the G7 and the G20. Italy is the eighth largest
exporter in the world with $514 billion exported in 2016.
Its closest trade ties are with the other countries of the
European Union, with whom it conducts about 59% of
its total trade. The largest trading partners, in order of
market share, are Germany (12.6%), France (11.1%), the
United States (6.8%), Switzerland (5.7%), the United
Kingdom (4.7%), and Spain (4.4%).
 Economy of Italy
GDP $2.072 trillion (nominal, 2018 est.)

$2.397 trillion (PPP, 2018 est.)

GDP rank 8th (nominal, 2018)

12th (PPP, 2018)

GDP growth 1.1% (2016) 1.6% (2017)

0.9% (2018e) 0.1% (2019e)

GDP per capita $34,260 (nominal, 2018 est.)

$39,636 (PPP, 2018 est.)

GDP per capita rank 25th (nominal, 2018)

33rd (PPP, 2018)

GDP by sector agriculture: 2.1%

industry: 23.9%

services: 73.9% (2017 est.)

Inflation (CPI) 0.758% (2019f est.)

1.243% (2018)

1.326% (2017)

GDP:
DEFINITION: GDP is the final value of the goods
and services produced within the geographic boundaries
of a country during a specified period of time, normally
a year. GDP growth rate is an important indicator of the
economic performance of a country.
DESCRIPTION: It can be measured by three
methods, namely

1. Output Method: This measures the monetary or

market value of all the goods and services produced
within the borders of the country. In order to avoid a
distorted measure of GDP due to price level changes,
GDP at constant prices, real GDP is computed. GDP (as
per output method) = Real GDP (GDP at constant
prices) – Taxes + Subsidies.

2. Expenditure Method: This measures the total

expenditure incurred by all entities on goods and
services within the domestic boundaries of a country.
GDP (as per expenditure method) = C + I + G + (X-IM)
C: Consumption expenditure, I: Investment
expenditure, G: Government spending and (X-IM):
Exports minus imports, that is, net exports.

3. Income Method: It measures the total income earned

by the factors of production, that is, labour and capital
within the domestic boundaries of a country. GDP (as
per income method) = GDP at factor cost + Taxes –
Subsidies.
 TRENDS IN GDP OF ITALY

Nominal GDP IN (TRILLIONS)

2.2
2.1
2
1.9 2.152
2.13 2.074
1.8 1.947
1.7 1.832 1.869

1.6
2013 2014 2015 2016 2017 2018

TRENDS IN INFLATION OF ITALY

INFLATION Trend
1.5

1.212 1.153
0.5 0.959 0.933 0.848
0.529
0
2013 2014 2015 2016 2017 2018

SOURCE: WORLD BANK DATA

 MONETARY POLICY OF ITALY
2019

The Bank of Italy, known in Italian as [La] Banca

d'Italia (pronounced [ˈbaŋka diˈtaːlja]), also known as
Bankitalia, is the central bank of Italy and part of the
European System of Central Banks. It is located in
Palazzo Koch, via Nazionale, Rome.

CENTRAL BANK OF ITALY

The Bank of Italy contributes to draft monetary policy
for the euro area through the Governor's participation in
the Governing Council of the European Central Bank
(ECB). As a member of the Governing Council, the
Governor exercises his duties in full autonomy and
independence, contributing to monetary policy decisions
also based on the preparatory activities of the committees
and working groups set up within the Eurosystem, which
include representatives from the Bank of Italy. In
accordance with the principles of decentralization and
subsidiarity established at European level, the Bank of
Italy also contributes to implement monetary policy.

Objectives and strategy

The primary objective of the Euro system (comprising
the ECB and the national central banks of the countries
that have adopted the euro) is to maintain price stability,
as laid down in Article 127 of the Treaty on the
functioning of the European Union (formerly Article 105
of the EC Treaty).
Price stability is essential to support the general
economic policies of the European Union, which are
designed to achieve the objectives of balanced economic
growth, full employment and, broadly speaking,
individuals' economic well-being.
The pursuit of price stability consists in maintaining
inflation below, but close, to 2 per cent over the medium
term. The Euro system’s monetary policy strategy rests
on a number of guiding principles and on the analysis
of economic and monetary variables (the two pillars).

Instruments
Monetary policy is conducted by regulating central
banks' liquidity (reserves), which is made available to the
banking system in order to satisfy its financing
requirements stemming, among other things, from public
demand for bank notes and the obligation to fulfil reserve
requirements. In establishing the costs of accessing
liquidity, the central bank sets interest rates on the
interbank market, thereby influencing the rates applied
by banks to firms and households on deposits and loans.
Upholding the principle of decentralization, the Bank of
Italy operates with its own counterparties i.e. with banks
that operate in Italy in accordance with the set of
instruments, rules and procedures defined by the Euro
system for implementing monetary policy (operational
framework).
Italy is a member of the European Union which has
adopted the euro. Italy's benchmark interest rate is set by
the European Central Bank. The official designation for
the rate is main refinancing operation. This page
provides - Italy Interest Rate - actual values, historical
 data, forecast, chart, statistics, economic calendar and
news. Italy Interest Rate - actual data, historical chart and
calendar of releases - was last updated on September of
2019.

taly Money Last Previous Highest Lowest Unit

Interest Rate 0.00 0.00 4.75 0.00 percent [+]

Money Supply M1 1223983.00 1226080.00 1226080.00 65564.00 EUR Million [+]

Interbank Rate -0.41 -0.37 20.51 -0.41 percent [+]

Money Supply M2 1593542.00 1595700.00 1595700.00 132635.00 EUR Million [+]

Money Supply M3 1604016.00 1604801.00 1604801.00 132635.00 EUR Million [+]

Foreign Exchange Reserves 157682.70 150179.60 157682.70 39776.80 EUR Million [+]

Banks Balance Sheet 3791717.93 3766464.65 4247044.51 1393773.06 EUR Million [+]

Loans to Private Sector 661381.00 658777.00 914847.95 383188.54 EUR Million [+]

Private Debt to GDP 168.90 168.00 185.70 119.60 percent [+]

Central Bank Balance Sheet 1029997.40 1006387.10 1029997.40 146808.50 EUR Million [+]