Business Report – Country Analysis: Italy
This report provides an analysis of economic indicators critical for deciding on the further business expansion of Canadian business into the realities of current Italian business environment. Based on the evidence collected in attained benefits, risks and costs of investments, it is recommended to not proceed with further expansion of operations in the country. Italy’s mounting sovereign debt, complex taxation system, corruption and cultural diversity of north and south would require another assessment country’s business landscape as soon as reforms are implemented and country’s financial performance is improved.
While it is evident that Italian economy is one of the most developed in the world, the recommendation is still to avoid business investment in the current fiscal year due to significant uncertainties regarding the future of Italian economy at least today, as well as the overall pathway of resolving economic recession in Eurozone area.
Country’s Macro Environment.
Country DescriptionItaly is a highly developed, industrial country located in Southern Europe. It is a part of Group of Seven (G7), an intergovernmental organization which unites leading advanced economies of the world, and also is one of the founding members of European Union, which interdependent it with other countries of this group from macroeconomic perspectives. In 2013, Italy was ranked amongst the top ten economies in the world based on real GDP indicator, which reached $1, 7 trillion the same year. Italy has well-developed processing and manufacturing sector, with major industries including machinery, motor vehicles, electrical goods, and fashion and clothing, as well as service industry, but is somewhat diminished in agricultural sector. Italy’s fiscal, economic and monetary interdependence with European Union, however, has brought into high budget deficit and gross debt known as Eurozone area crisis, followed by some ineffective measures introduced by Italian government for local crisis resolution. In the second quarter of 2014, country slipped back into a technical recession, which is quarter-on-quarter calculated GDP decline, due to the tighten credit condition for business investments and consumer spending, high unemployment rates and political fluctuations. The problems of a contemporary Italian economy include complexity of regulatory rules and legal procedures required for business operations, ranking Italy at 56th position out of 189 countries in ease of doing business report, as well as 69th out of 175 by Corruption Perception Index, with latter to be especially high comparing to its European counterparts like Denmark or Sweden.
Political Situation and Stability.
Italian political environment is influenced by regulatory norms and principles of the European Union. Italy is parliamentary republic, where legislative power is exercised by the Parliament; the executive power is exercised by the Government and the judicial power, which is independent from legislative and executive powers, is represented by Supreme Law Council and Constitutional Court. The political stability index in Italy is comparatively high, which is characterized by the record of peaceful transition of power, respect to human and civil rights, …