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Capital City: Rome
%T:%M %A in Roma and Milan
After a year of almost zero growth (+0.2%) in 2005, Italy should see a recovery of business activity in 2006 with a rate of growth of between 1.1% and 1.5% according to the latest estimates from the OECD and the European Commission. Exports should benefit from a more favourable European economic situation and household consumption should increase.

Italy is suffering from a decline in competitiveness and an intensification of international competition, particularly in textiles and clothing, machinery and furniture. The country is characterised by strong regional disparities: a North that is industrial, rich and dynamic, dominated by the private sector, and a South that is traditionally agricultural and poor ("Mezzogiorno"), with a rate of unemployment that is three times higher. Italy is well known for its "family" capitalism, typified by its large number of small family-run businesses. More than 90% of industrial companies have less than 100 employees and nearly 90% of companies have less than 20 employees. Unemployment is down slightly (7.8% in 2005 against 8.1% in 2004) and inflation is restrained (2.1% in 2005 against 2.2% in 2004). The agricultural sector contributes 3% of Italian GDP. Crops represent 60% of agricultural production. Italy is the largest European producer of rice, fruit and vegetables and the second-largest world producer and exporter of wine. The other primary crops are cereals and olive oil. The production and consumption of organic products is booming. Italy has few ore resources. The manufacturing sector is in crisis (loss of productivity, heavy taxation, etc.), yet it continues to fuel the Italian economy. Manufactured goods represented 96.5% of Italian exports in 2005, that is 234.6 billion euros over the period January to October 2005. Luxury goods manufacturing is an important part of Italian industry. The privatisation programme and the liberalisation of the energy and telecommunications markets offer interesting opportunities for investors and exporters.

Italy is the European Union's third largest exporter, with a share of world markets estimated at 3.9% in 2004. In 2005, the value of Italian exports increased by +4%. The European Union took 60% of Italian exports in 2005. The three largest client countries are Germany, France and the United States. Exports outside the EU go mainly to the United States, the Commonwealth of Independent States (CIS), China and South Korea.

The countries that are Italy's three largest suppliers are Germany, France and the Netherlands. Italy imports mainly mining products (14% of imports), chemicals and pharmaceuticals (13.6%), vehicles (13.5%) and precision machinery and electrical appliances (12.1%). Refined oil products only represent 1.8% of Italian imports. Italy's primary export is machinery (mainly for industrial use). These represented 19.7% of Italian exports in 2005. Vehicles (finished products and spare parts) represented 11.1% of exports, while chemicals and pharmaceuticals, plus metallurgical products, represented 10.1%. Then come precision electrical machines and appliances (9.1%), textile products (9%) and leather products (4.3%). Products coming from agriculture, animal husbandry and fishing only represent 1.4% of Italian exports.

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