Italy - Political stability leads to strong economic growth

In the early days of the pandemic Italy was one of the hardest-hit countries, but since last year the European Union nation has been firmly looking to its future, while aiming to put behind it decades of slow growth and perceived economic stagnation.

Mario Draghi, the country's prime minister, pointed to the fact that Italy's economic growth was expected to hit roughly 6% in 2021, following a drop of almost 9% in 2020. “Employment has also begun to grow again: in the third quarter of this year, there were 500,000 more people in work, and 308,000 less unemployed people compared with the same period in 2020, he said.

A former head of the European Central Bank, Draghi became Italy's prime minister in February 2021, and has guided the country through the latter part of the pandemic with steadfastness and competent manner that has been appreciated both at home and abroad. Draghi is now being touted as a potential replacement for Sergio Mattarella, Italy's outgoing president, though many in Italy would prefer to see him stay in his current more day-to-day role.

Italy is currently the world's eighth-largest economy, with a GDP of $1.85 trillion in 2020, and GDP per capita reaching $31,360. The country has a strong manufacturing sector, the second-largest in Europe, operating in sectors as varied as industrial equipment, fashion, pharmaceuticals and automotive manufacturing.

In November 2021 Italy's manufacturing sector recorded its strongest growth for more than 24 years, with the IHS Markit Purchasing Managers' Index (PMI) for Italian manufacturing rising to 62.8, its highest level on record. It is estimated that manufacturing revenue in Italy will reach more than $140 billion by 2025.

The country also has a strong and internationalized financial services sector, as well as strong export-driven industries. According to the United Nations Conference on Trade and Development (UNCTD), Italian merchandise exports rose by more than 30% between 2005 and 2020, hitting $496 billion in 2020, despite the effects of the global pandemic.