Italy - An Overview of Its Economy and International Freight By Stephen Willis At Isnare.com Ezine Articles

Italy has a fundamentally robust economy and high national incomes, with a GDP per capita of over 30,000 dollars. There has been consistent GDP growth until the arrival of the global economic slowdown in 2008. The economy of Italy has transformed since the Second World War as over this period the country has developed from an agriculturally based economy to an industrial nation that can now stake claim to being the world's seventh largest market economy. The fact that Italy is a member of the Group of Eight (G8) industrialized nations is a testament to this remarkable latter day renaissance.

Italy's economy benefits from some natural resources, in particular in agriculture, fishing and natural gas. However, the country is a net importer of food as much of the land in Italy is not suitable for agriculture. Natural gas is the country's most important natural mineral resource, mainly in the Po Valley and offshore in the Adriatic. Most raw materials for manufacturing have to be imported into Italy, as well as more than three quarters of its energy requirements. So this situation has had an impact on the development of freight services to Italy, with a highly developed system of freight forwarders and shipping companies serving the import market and making use of a developed intermodal transport system.

Within agriculture, important products in Italy include wheat, rice, grapes, beef, dairy products, olives, citrus fruit, potatoes and sugar beets.

The most important industries are tourism, iron and steel, chemicals, machinery, precision engineering, automotives, textiles, clothing, footwear and ceramics.

The international freight systems are sophisticated and well geared up to handling the specific needs of these kinds of merchandise.

In 2008, Italy exported over 500 billion dollars of merchandise, primarily mechanical products, clothing, textiles, transportation equipment, metal products, chemical products, food and agricultural products. Germany is the single most important destination for exports, accounting for over 12% of the total, followed by France, at just under 12%, then Spain at 7%, United States at 7% and the United Kingdom at 6%. So there is considerable existing expertise and knowledge within shipping companies about the most efficient ways of arranging international freight between these countries.

At the same time as there is such a vibrant export market, there are also around 500 billion dollars of imports to Italy. The most important trading partner is Germany again, accounting for 17% of all imported goods, followed in terms of magnitude by France, then China, Netherlands, Belgium and Spain. Many a shipping company has recently entered the comparatively new freight services market serving the business between Italy and China.

Imports to Italy include machinery and transport equipment, foodstuffs, metals, wool, cotton and energy products.

The country has significant budget deficits and high public debt. This situation is under increasing strain at present due to the global economic slowdown and the budget deficit is expected to grow higher than the 3% ceiling stipulated as a condition of its membership of the European Union, which it joined in 1998. The global economic crisis has had a negative impact on both exports and domestic demand in 2008 and 2009. The freight services market has suffered in turn as a result of this downturn. There has been a decline in income for the freight forwarding sector operating in Italy in 2008 and 2009, but the impact of increasing competition has been a spur to development as the better freight companies raise their game to compete more effectively.

Apart from the current economic slowdown, Italy is struggling with the long term impact of increasing competition from China and other low wage countries on Italy's lower end industrial product sector. As a result, Italy, like other industrialised nations is increasingly looking to build competitive advantage through added value and knowledge based differentiation. Over time, this change of emphasis should help protect the Italian economy and the freight services sector will doubtless respond to reflect any changes.

One particular point worth noting regarding the economy in Italy is that it is also affected by a large black economy, thought to represent around a third of total GDP, which represents considerable lost revenue in tax to the government, and is a perpetual challenge as the government in Italy look to find ways to strengthen the economy further. This is just one of the many challenges facing Italy and its economy, but there is little doubt that the economy and the freight services sector that supports its international freight will continue to thrive over the longer term.

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