Economic Studies


Population 60.4 million
GDP per capita 33,159 US$
Country risk assessment
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major macro economic indicators

  2018 2019 2020 (e) 2021 (f)
GDP growth (%) 0.8 0.3 -9.3 5.1
Inflation (yearly average, %) 1.2 0.6 0.1 0.6
Budget balance (% GDP) -2.2 -1.6 -13.0 -6.2
Current account balance (% GDP) 2.5 3.0 3.2 3.0
Public debt (% GDP) 134.8 134.8 161.8 158.3

(e): Estimate (f): Forecast


  • Manufacturing industry still important (machinery, pharmaceuticals, etc.)
  • Increasing efforts to combat tax evasion and reduce informality
  • Bank asset quality has significantly improved
  • Comparative advantage in high-end food products
  • European support creates opportunity for modernization


  • Public debt still very high, net international investment position very negative
  • Very high youth unemployment that motivates brain drain
  • Prevalence of small, low-productivity companies (more than 90% of firms have 10 employees or less)
  • Strong exposure to pandemic-sensitive sectors (tourism, automotive, textiles)
  • Strong regional disparities, organized crime still influential in the South

Risk assessment

After a historic contraction and an above-average rebound, the stage is set for recovery

Going into the pandemic, the Italian economy appeared more fragile than its Eurozone peers, featuring chronically stagnant growth. Surprisingly, it has performed better than Spain and France, with a slightly weaker Q2 2020 contraction (IT: -18% YoY, FR: -19%, ES: -21.5%) followed by a more durable summer rebound. Nevertheless, the 2020 contraction will be among the strongest in the industrialized world, creating considerable risk for the most vulnerable firms. The share of firms posting a profit for 2020 is forecasted to decline to 50-45%, down from 75% in 2019. The government has deployed extraordinary measures to safeguard viable firms, most notably a robust furlough scheme (covering 28% of the private sector workforce at its peak) and a loan guarantee program (8% of GDP in attributed financing). It is estimated that the pandemic created a liquidity shortfall of EUR 48 billion for 142,000 firms, which was reduced to EUR 17 billion for 32,000 firms thanks to public intervention. Firm leverage (debt/assets) will grow to 45%, lower than the 53% peak reached under the Euro crisis. Nonetheless, some sectors will see their expected probability of default increase substantially, including tourism (from 4.3 to 7.3%), entertainment (4.4 to 6%), construction (6 to 6.9%) and energy (3.5 to 5.2%). All components of demand are in for a double-digit contraction in 2020 (consumption: -10%, investment: -14%, exports: -17%), before a rebound in 2021 (consumption: 4%, investment: 7%, exports: 11%). Only government spending will have a positive contribution over 2020-2021. The rebound should be driven by manufacturing exports to a recovering EU (machinery, automotive, food products) and, more gradually, domestic services.


Public debt reaches new heights, but a radical shift in EU-ECB policy mitigates its risk

Emergency measures cost around 5.5% of GDP. These include several grant programs for vulnerable households and firms, selective suspension of social security contributions, the aforementioned furlough, substantial health spending and tax deferrals. Overall, expenditure will increase by 11%, less than compensated by a 4% decline in 2021. While much of the emergency spending will be dialled back, the fiscal stance will remain expansionary, with continued support for the most vulnerable pockets of industry, a new “family bonus” transfer and poor region tax cut (combined cost of 1% of GDP), and sustained strengthening of research, education and health spending. Revenue will contract by 11% before a resounding 8% rebound. Public debt will reach a level comparable to that of Greece in 2012, but under a very different European context. The ECB has expanded QE by EUR 2.5 trillion and is now engaged in open-ended purchases of bonds of weaker member states. Italy will be the main beneficiary of the EUR 750 billion Next Generation EU fund, receiving EUR 209 billion over 2021-2027. As long as this new consensus holds, the effect of cheap debt service will overcompensate fiscal and economic weaknesses. However, this leaves public finances exposed in a scenario of returning inflation. The pandemic will have a broadly neutral effect on the structural external surplus, with both imports and export of goods and services plunging. Banks remain relatively fragile, but bad loans are not expected to reach the Euro crisis peak.


An fragile executive, a collapsing populist left and a steadily rising nationalist right

Italy is governed by a coalition government led by the centre-left Democratic Party (DP, 13% of seats) and the populist-left 5-star movement (5SM, 29%), with the support of minor parties. Originally a marriage of convenience set up to displace rising right-wing politician Matteo Salvini from power, the coalition was emboldened by PM Giuseppe Conte’s rising popularity during the pandemic. But political uncertainty has returned after Italia Viva, one of the minor parties, withdrew its support. Until the pandemic allows for elections, a succession of fragile governments is the likelier outcome. To recover their dwindling support, 5SM lawmakers tend to attack business interests. This has been the driving force behind the fight over ArcelorMittal’s legal protections in the Taranto steel plant, as well as the dispute over Atlantia’s motorway concession, both of which have involved intense legal confrontations between the state and investors. Between the resilience of Salvini’s Lega and the rise of Giorgia Meloni’s Fratelli, the electorate is shifting to the nationalist right.


Last updated: February 2021


Trade notes (cambiali) are available in the form of bills of exchange or promissory notes. Cambiali must be duly accepted by the drawee and stamped locally at 12/1000 of their value, being issued and payable in the country. When issued in the country and payable abroad, they are stamped at 9/1000, and finally stamped at 6/1000 in the country if stamped beforehand abroad, with a minimum value of €0.50. In case of default, they constitute de facto enforcement orders, as the courts automatically admit them as a writ of execution (ezecuzione forzata) against the debtor.

Signed bills of exchange are a reasonably secure means of payment, but are rarely used due to a high stamp duty, the somewhat lengthy cashing period, and the drawee’s fear of damage to his reputation caused by the recording and publication of contested unpaid bills at the Chambers of Commerce.

In addition to the date and place of issue, cheques established in amounts exceeding €1,000 and intended to circulate abroad must bear the endorsement non trasferibile (not transferable), as they can only be cashed by the beneficiary. To make the use of cheques more secure and efficient, any bank or postal cheque issued without authorisation or with insufficient funds will subject the cheque drawer to administrative penalties and listing by the CAI (Centrale d’Allarme Interbancaria), which automatically results in exclusion from the payment system for at least six months.

Bank vouchers (ricevuta bancaria) are not a means of payment, but merely a notice of bank domicile drawn up by creditors and submitted to their own bank for presentation to the debtor’s bank for the purposes of payment (the vouchers are also available in electronic form, in which case they are known as RI.BA elettronica).

Bank transfers are widely used (90% of payments from Italy), particularly SWIFT transfers, as they considerably reduce the length of the processing period. Bank transfers are a cheap and secure means of payment once the contracting parties have established mutual trust.

Debt collection

Amicable phase

Amicable collection is always preferable to legal action. Postal demands and telephone dunning are quite effective. On-site visits, which provide an opportunity to restore dialogue between supplier and customer with a view to reaching a settlement, can only be conducted once a specific licence has been granted.

Settlement negotiations focus on payment of the principal, plus any contractual default interest as may be provided for in writing and accepted by the buyer.

When an agreement is not reached, the rate applicable to commercial agreements is the six-monthly rate set by the Ministry of Economic Affairs and Finance by reference to the European Central Bank’s refinancing rate, raised by eight percentage points.


Legal proceedings

When creditors fail to reach an agreement with their debtors, the type of legal action taken depends on the type of documents justifying the claim.


Fast-track proceedings

Based on cambiali (bills of exchange, promissory notes) or cheques, creditors may proceed directly with forced execution, beginning with a demand for payment (atto di precetto) served by a bailiff, preliminary to attachment of the debtor’s moveable and immoveable property (barring receipt of actual payment within the allotted timeframe). The resulting auction proceeds are used to discharge outstanding claims.

Creditors can obtain an injunction to pay (decreto ingiuntivo) if they can produce, in addition to copies of invoices, written proof of the claim’s existence by whatever means or a notarized statement of account. A forty-day period is granted to the defendant to lodge an objection.

Ordinary summary proceedings (procedimento sommario di cognizione), introduced in 2009, are used for uncomplicated disputes which can be settled upon simple presentation of evidence. Sitting with a single judge, the court determines a hearing for appearance of the parties, and delivers a provisionally executory ruling if it acknowledges the merits of the claim; the debtor however has 30 days to lodge an appeal.


Ordinary proceedings

The creditor must file a claim with the court (citazione) and serve summons to the debtor, who will file a defence (comparsa di constituzione e risposta) within ninety days via a preliminary hearing. The parties then provide briefs and evidence to the court. When the debtor fails to bring a defence, the creditor is entitled to request a default judgment. The court will usually grant remedies in the form of declaratory judgments, constitutive judgments, specific performance and compensatory damages but it cannot award any damages which have not been requested by the parties.

Undisputed claims are typically settled within four months, but the timescale to obtain an enforceable court order depends on the court. Overall, disputed legal proceedings take up to three years on average.

The current civil procedure code is intended to speed up the pace of proceedings by reducing the procedural terms, imposing strict time limits on the parties for submitting evidence and making their cases, and introducing written depositions in addition to oral depositions.

Enforcement of a legal decision

A judgment becomes enforceable when all appeal venues have been exhausted. If the debtor fails to comply with a judgement, the court can order compulsory measures, such as an attachment of the debtor’s assets or allowing the payment of the debt to be obtained from a third party (garnishee order) – although obtaining payment of a debt via the latter option tends to be more cost-effective.

For foreign awards, decisions rendered from a country in the EU will benefit from special procedures such as the EU Payment Order or the European Enforcement Order. Judgment from a non-EU country will have to be recognized and enforced on a reciprocity basis, meaning that the issuing country must be part of a bilateral or multilateral agreement with Italy.

Insolvency proceedings

Out-of court proceedings

The 2012 legal reform allows a debtor to file an application for composition by anticipation. Negotiation on an agreement commences 60 to 120 days prior to the initiation of judicial debt restructuration proceedings. The debtor retains control over the company’s assets and activities. A new pre-agreed composition plan may be agreed with the approval of creditors representing 60% of the debtor company’s debt.


Restructuring proceedings

This settlement is a court procedure which allows a company in financial difficulty to propose a debt restructuration plan. The debtor files a proposal to the court to repay the total amount outstanding to the secured creditors. If the court admits it, a commissioner trustee is appointed, and if the majority of the unpaid creditors accept the proposal, the court will officially validate the proceedings.

Alternatively, a debt restructuring agreement (accordi di ristrutturazione del debito) aims to restructuring the debt so as to rescue the debtor company from bankruptcy proceedings. The debtor must file a report on its ability to pay the remaining creditors in full, who otherwise can challenge the agreement before a bankruptcy court by requiring verification that their claims will be paid as normal.



This procedure aims to pay out the creditors by realising the debtor’s assets and distributing the proceeds to them. The status of insolvency justifies the adjudication of bankruptcy by the court, even where the insolvency is not due to the debtor’s misconduct. The court hears the evidences of the creditors’ claims and appoints a receiver to control the company and its assets. This receiver must liquidate all of the company’s assets and distribute the proceeds to the creditors to have the proceedings formally concluded.

Insolvency trend Italy
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