December 1st, 2011 
admin 
Finance and Economy
The global economic crisis has affected the economy of Italy and has caused a terrible financial and economy crisis in Italy. The crisis has exacerbated the already existing structural weakness in the economy of Italy. Since the last decade there was already a decline in the growth rate of Italy. This declining growth rate is a reflection of weak productivity. There has been a steady erosion of competitiveness in Italy. The reason behind this has been the economic rigidity and Italy’s specialization in products which have low value added. As a consequence of erosion of the competitiveness Italy has constantly been losing its market share of world trade. There has been a sharp fall in Italy’s export; this is mainly due to recession in Italy’s main trading partners. Although Italy did not witness any fallout from the banking system the financing conditions became tight and the growth of credit fell.
According to the statistics, Italy’s economy has grown at only 0.3% and this has been the trend for the past few years. Experts say that the economy is projected to grow at a similar feeble rate for the next few years. To add to the troubles is the very high public debt of Italy. The debt currently stands at about 120% of the gross domestic product (GDP). After Greece this is the highest public debt in the world. Also, it has been reported that in the year 2009 the number of persons who were employed decreased by 380,000. Bank of Italy recently conducted a survey in which it was found that the companies in Italy have suffered worsening of their revenues very prominently since the second half of the year 2008. According to a survey conducted by Mediobanca and the Italian Union of Chambers of Commerce, Industry, Artisans and Agriculture, the medium sized companies (with 50-499 employees) have been able to cope in a better way than others with the negative effect of the financial and economic crisis in Italy. The smaller enterprises have suffered a stronger impact of the crisis. In Italy the small enterprises represent about 95% of the enterprise and provide 50% of the employment. Crisis Barometer survey (Barometro della Crisi), which is conducted by the National Crafts Confederation found that there was a marked reduction in the profitability of the small enterprises in 2009. When we analyze the situation according to the geographical areas then it is observes that the areas with the highest density of small companies have been the worst hit by the negative effects of the economic crisis. When it comes to the sectors, then the crisis has hit almost all the fields of production. Particularly the mechanical engineering sector seems to be the worst hit by this crisis. In the previous year the output fell by 21.7% according to a survey conducted on the trends of the economy which was carried out by the Italian Federation of Metalworking Industries. The trade union confederations have asked the Italian government to intervene and change the policies such as bring in a new tax system.
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