G-20 nation profile: Italy
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Here is an overview of Italy, one of the 20 countries that will be attending the upcoming summit in Pittsburgh.
WHO IS THE LEADER FROM ITALY ATTENDING THE G-20 SUMMIT?
The Italian delegation will be led by Prime Minister Silvio Berlusconi, Italy's most successful -- and controversial -- politician in years. The self-made Berlusconi, 72, started as a cruise ship singer but amassed a multi-billion fortune in property development and through a media empire that includes three of Italy's seven national television networks. He's also reshaped Italian politics while holding onto power for all but 20 months since 2001. His reputation has been tarnished by a series of legal problems and a recent prostitution scandal, but his hold on power remains strong.
WHAT ARE THE CURRENT ECONOMIC CONDITIONS IN ITALY?
Italy has suffered from economic malaise for many years, with economic growth in the country trailing the European Union average for 13 of the last 14 years. The economy went into a free-fall in the second quarter, contracting 5.9 percent compared to the same period one year ago. But economists are already saying that was an aberration: Industrial output and employment levels remained flat compared to the previous quarter and pollsters report that consumer confidence actually improved to its highest level in two years.
All told, Italy has been weathering the world economic turmoil better than most, due to relatively low consumer debt and a limited exposure to stocks. The government says it expects to see positive growth starting in the fourth quarter and continuing into 2010. "Once Italy exits the crisis it should do better than other countries," said Alberto Mingardi from the Bruno Leoni think tank in Turin. "Italy was not as damaged by the turmoil as other countries because, paradoxically, when the crisis broke it was already in crisis."
WHAT IS THE GENERAL MAKE-UP OF THE ITALIAN ECONOMY?
Italy's $2.3 trillion economy, the world's seventh largest, is mostly service based, led by tourism and financial services. Like most industrialized economies, it has seen an erosion of its industrial base in recent years, as production is shifted to cheaper markets. But Italian industry has taken a few positive steps forward in recent months, with carmaker Fiat acquiring control of Chrysler, former state telephone monopoly Telecom Italia abandoning plans to pull out of Brazil, and flagship air carrier Alitalia successfully restructuring and halting losses that totaled $1.5 million per day at their worst.
But the economy remains heavily dependant on tourism and the production of high-quality consumer products like food and high-end fashion -- both areas that should receive a boost if the world starts to pull out of its economic problems. Financial services, however, are expected to see limited growth prospects in the near term both because of currency issues and because of a period of consolidation in the banking sector. "Some of the main economic areas remain hindered by the strong euro, but compared to other euro-area economies, Italy may be poised to ride a rebound in the world economy almost from the start," said Javier Noriega, chief economist with Milan investment bankers Hildebrandt and Ferrar.
WHAT IS MR. BERLUSCONI HOPING TO GET OUT OF THE G-20 SUMMIT?
Officially, Italy says it would like to use the G-20 to tie up loose ends from the July G-8 summit it hosted in L'Aquila and to forward its economic priorities of eliminating tax havens, increasing international economic transparency, and work on trade rules for agriculture.
But the unofficial priority, according to pollsters, is to create a forum for Mr. Berlusconi to put recent sex scandals behind him by appearing statesmanlike in an international setting. "With all the sexual allegations swirling around Berlusconi in recent weeks, the taped calls, the allegations from his estranged wife, the prospect of leaving Italy for a few days and appearing on the international stage with other heads of state must seem like a gift from heaven," said Saul Gittering, co-director of the Rome-based polling firm Opinioni.
WHAT ELSE SHOULD WE KNOW ABOUT ITALY'S CURRENT POLITICAL AND ECONOMIC SITUATION?
Despite the economic turmoil, Italy has been pursing several major infrastructure projects. The two most important are the Messina bridge project and the plans to reintroduce nuclear power two decades after it was outlawed.
The Messina bridge project, which could have an economic impact worth as much as $14 billion, would link the 3-mile stretch between the Italian mainland and Sicily. Advocates says it will create thousands of new jobs and spark economic growth in the area, while opponents argue current infrastructure (the Straits of Messina are currently serviced by a network of ferries) is sufficient for the area's needs. Construction is tentatively planned to start next year.
The nuclear power plans are an attempt to decrease Italy's dependence on foreign power while decreasing greenhouse gas emissions. Nuclear power was banned in Italy 22 years ago, in the wake of the Chernobyl nuclear disaster, and opponents of the plans still say that the risks outweigh the benefits. If all goes as planned, the first new-generation nuclear generators should start producing power by 2013.
First Published September 11, 2009 12:00 am
