Economic Analysis


Population 60.6 millions
GDP per capita 31,997 US$
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major macro economic indicators


  2016 2017 2018 (e) 2019 (f)
GDP growth (%) 1.1 1.6 0.9 0.3
Inflation (yearly average, %) -0.1 1.3 1.3 1.5
Budget balance (% GDP) -2.5 -2.4 -1.9 -2.9
Current account balance (% GDP) 2.5 5.7 2.6 2.5
Public debt (% GDP) 131.4 131.2 131.1 132.0

(e): Estimate. (f): Forecast.


  • Reform efforts (labour market, banking sector, insolvency, etc.)
  • Manufacturing industry still important
  • Renewed competitiveness and stronger export sector
  • Improvement in the financial position of companies
  • High-quality infrastructure
  • Major tourism potential


  • Public debt still high; very negative net external position
  • Labour market duality; high unemployment rate
  • Large proportion of small, unproductive companies
  • Fragmented political landscape; national unity weakened by regions’ push for autonomy
  • Regional disparities
  • Low administrative efficiency

Risk assessment

Sluggish growth in the face of political uncertainties

After recovering strongly in 2017, the Italian economy was unable to avoid the slowdown that hit the eurozone in 2018. In addition to external factors, political uncertainties increased following the March 2018 parliamentary elections. The subsequent market tensions eroded business and household confidence, adversely affecting activity over the final two quarters. Growth is expected to slow further in 2019. Household consumption, which remained flat in 2018despite an improvement in labour market conditions, is set to grow marginally. Deteriorating economic prospects will weigh on job creation, and weak wage growth will continue to dampen disposable income as inflation rises. Investment, the main driver of the recovery, is expected to moderate due to weaker confidence and a worsening of corporate financing conditions. Sovereign interest rate increases are expected to continue to affect the balance sheets of Italian banks that hold public debt, eating into their profits and limiting their lending to business. In addition, although they have become more capitalised and resilient since 2015, banks remain exposed to non-performing loans (9.7% of the total in June 2018) and will continue to be among the European banks that are most impacted by the adoption of the EU IFRS 9 accounting standard. The expansionary fiscal policy planned by the government should support domestic demand, but the effectiveness of these measures will continue to depend on a return to confidence. Unlike in 2018, external trade should make a positive contribution to activity.


Agreement with the European Commission on fiscal policy

Following two months of negotiations between the European Commission and the Italian government, an agreement on the 2019 budget was reached, allowing Italy to avoid an excessive deficit procedure (EDP). The announcement of a deficit target of 2.4% in October, even before the finance law was presented to the Commission, triggered strong market reactions, pushing up sovereign rates in the eurozone’s second most indebted country. With a deficit target of 2.04% for 2019 and a revised growth forecast of 1%, the coalition government's budget continues to fall outside the stability programme but with Brussels approval. By incorporating the broad outlines of the programmes of the two parties in the majority, it should make it possible to finance the government's flagship measures, such as repealing the planned VAT increase, lowering the retirement age, introducing a guaranteed minimum income targeting low-income households and boosting public investment. However, the allocations for certain measures have been reduced. They will have to be financed through privatisations, a tax amnesty and the expected increase in budgetary revenues. Although it remains below 3%, the deficit target set in the budget law is not only higher than the 0.8% target set in the stability programme but should also lead to an increase in debt in a context of higher debt costs, especially since the public balance will probably be higher than that announced.


A two-headed government, but for how long?

The Italian legislative elections resulted in a Parliament without a majority where the traditional parties on the left (PD) and the right (Forza Italia) were ousted in favour of movements on the more extreme ends of the spectrum. The Five-Star Movement emerged as the big winner in the parliamentary elections, with the largest number of deputies, while the right-wing coalition comprising Mattéo Salvini’s League and Forza d'Italia led by Silvio Berlusconi came in second place. After several months of negotiations, a coalition between the League and the Five-Star Movement was proposed. Based on an unprecedented agreement centred on the key proposals of the two political parties, a unity government was presented to the President of the Republic, Sergio Mattarella, in May 2018.

The government comprises members from the majority as well as ministers without a political affiliation, including the minister of finance and Prime Minister. The two coalition party leaders, Matteo Salvini and Luigi di Maio, who have each given themselves a ministry, are both deputy prime ministers. This alliance of two parties from opposite ends of the political spectrum, with no political experience and whose programme and manifesto are, in part, unashamedly eurosceptic, has fuelled tensions on the markets by raising fears of an Italian systemic crisis. Despite the crises that have marked the early months of this government, including the face-off with the Commission on the 2019 budget, the coalition looks to be solid, although snap elections cannot be ruled out. If new elections are held, the League, which is riding on the growing popularity of its leader as Minister of the Interior, is likely to emerge stronger, at the expense of the Five-Star Movement, which would suggest a possible right-wing majority.


Last update : February 2019




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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