Macroeconomics: Economic Performance Indicators of Italy

Running head: Macroeconomics
MACROECONOMICS
Name of the student
Course name
Course ID

1
Macroeconomics
Table of Contents
Introduction......................................................................................................................................2
Part A: Economic performance indicators (EPI).............................................................................3
Growth in Real Gross Domestic Product.........................................................................................3
b. Public debt as a percentage of GDP............................................................................................4
c. Rate of inflation...........................................................................................................................5
d. Interest rates.................................................................................................................................6
e. Current account surplus/deficit as a percent of GDP...................................................................7
f. Exchange rate trends....................................................................................................................8
g. Unemployment rates....................................................................................................................9
1. An evaluation of how the 2007-2008 Global Financial Crises (GFC) affected the country’s
economy.........................................................................................................................................10
2. Assessment of the economic policies that has been implemented by government...................11
3. Description and evaluates changes in key economic performance indicators...........................12
4. Assessment of economic performances indicator......................................................................16
Conclusion.....................................................................................................................................17

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Macroeconomics
Introduction
The study is going to identify the economic performances indicator of Italy for 12 years.
The economic performances indicators of Italy will include the factors like growth in real
domestic product, public debt as percentage of GDP, rate of inflation, rate of interest, current
account surplus or deficit as percentage of GDP, exchange rate trends and unemployment rate.
Through the analysis of the economic performances indicators of Italy, the overall scenario of
the country will be clear and decisions regarding investment can be easily made. Deep analysis
of this decision will automatically increase the overall efficiency of Italy regarding the
improvement in trade and commerce. The deep analysis will automatically increase the
development of various government regulations that will help Italy in doing the better trade and
commerce. Through the development of the economic analysis, the improvement in the policy is
also closely linked with growth in EPI.

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Macroeconomics
Part A: Economic performance indicators (EPI)
Economic performance indicators will be helpful for the development of fiscal and
monetary policies that will not only increase the development of economy but will also increase
the development of trade and commerce.
Growth in Real Gross Domestic Product
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-6
-5
-4
-3
-2
-1
0
1
2
3
Real GDP of Italy
Values
Figure 1: Real GDP of Italy
(Source: Data.worldbank.org, 2019)
The above diagram is showing the fact that real GDP has shown an upward trend until
2007 and after that it started to fall deeply in 2009 and again started to increase. This may be the
reason due to the global financial crisis in 2008-2009. However, the improvement in the real
GDP will develop the growth of economy. Now the economy of Italy is growing in the sense that
in the European counterpart the Italian economy is having huge potentiality in the economic

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Macroeconomics
performances indicators. The performances of Euro are highly significant behind the stagnant
growth of the economy of Italy. Introduction of Euro has led to the lowering of real interest rates
that has a deep impact on the productivity of Italy. Many economists have also claimed that
presence of tight monetary policy within the economy is also responsible for the stagnating
growth of Italian economy (Papadia, 2019).
b. Public debt as a percentage of GDP
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
0
20
40
60
80
100
120
140
public debt as % of GDP in Italy
values
Figure 2: Public debt as percentage of GDP in Italy
(Source: Ceicdata.com, 2019)

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Macroeconomics
The High growth of public debt as percentage of GDP in Italy is increasing and this is not
at all good scenario for a developing nation like Italy. This is because, the government incurs the
public debt and increasing amount of public demand is actually going to incorporate pressure on
the development of the economy of Italy. Through the increase in the public debt, the economy
will not be able to increase production, as huge increased level of public debt will put pressure
on the current account balance of Italy. Due to increased amount of the public debt within the
economy, the government of Italy has faced huge deficit primarily in order to finance large
investments projects that were mainly designed for the welfare of state. On the other hand, long-
term bonds whose maturity has been over by 1 year mainly compose 75% of the government
debt. Some particular banks and insurance companies are holding almost 75% of the government
debts that are being hold by residents (Focus Economics, 2019). Even the performances of
domestic banks and financial institutions played a significant role during the Euro crisis.
c. Rate of inflation
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0
0.5
1
1.5
2
2.5
3
inflation rate of Italy
Percentage of GDP