Italy country brief

General overview

Italy, officially the Italian Republic, is a unitary parliamentary republic in Southern Europe. It borders France, Switzerland, Austria and Slovenia to the north, and extends into the Mediterranean Sea to the south. Italy has a population of 60.8 million (2015). Its capital is Rome.

A founding member of the European Union, Italy joined the Schengen Area in 1997 and adopted the Euro in 1999. Italy has held the Presidency of the Council of the European Union twelve times since 1959, most recently in the second half of 2014. There are 73 members of the European Parliament elected in Italy and one of them, Antonio Tajani, was elected as the Parliament’s President in January 2017.

In 2017, Italy is a Non-Permanent Member of the United Nations Security Council. It also holds the Presidency of the G7, and celebrates the 60th anniversary of the Treaty of Rome (1957), which established the European Economic Community.

Bilateral relationship

As two highly developed and complementary G20 economies with robust international engagement and enduring people-to-people ties, Australia and Italy share a warm relationship with much scope for expansion. Our cooperation intensified in 2014, during Australia’s Chairmanship of the G20 and Italy’s Presidency of the European Union.

According to the 2011 census, 916,120 Australians claimed Italian ancestry, with 185,402 Australian residents having been born in Italy.

Australia and Italy have concluded bilateral agreements covering culture, double taxation, air services, economic and commercial cooperation, reciprocal social security and health care benefits, and film co-production. They have also signed a number of Memoranda of Understanding (MOUs) covering defence materiel, defence industry, motor vehicle safety certification, sports cooperation, game meat exports and trade cooperation.

Italy is one of the priority economies identified by the Australian Government’s Global Innovation Strategy. Australia and Italy enjoy a strong and expanding relationship in science and technology, including astrophysics, nuclear science and technology, and nano-technology. Our science relationship, as measured by publications, has more than tripled over the past decade, with over 8,000 joint scientific papers produced since 2009, making Italy one of the top ten countries with which Australia cooperates in this sphere. In May 2017, the two countries signed an updated agreement on scientific, technological and innovation cooperation to further develop this important aspect of the relationship.

In July 2009, a MOU was signed between a number of countries, including Italy and Australia, regarding cooperation on the Square Kilometre Array, an international project to develop the world’s most powerful radio telescope. Several state governments have signed MOUs with Italian regional governments to promote cooperative activities and exchanges. There are also 180 agreements in place between Australian and Italian universities. Monash University and the Australian Catholic University have campuses in Prato and Rome respectively.

Australia and Italy have a rich and active relationship in culture and sport. In 2015, Australia inaugurated a new pavilion at the Venice art and architecture Biennale—the first new pavilion of the 21st century. In May 2015, we signed a Protocol updating the 1975 Cultural Treaty. The Australian Institute of Sport’s European Training Centre in Varese is a centre of excellence for Australian elite sports men and women. An MOU on sport visas signed in November 2016 will help to deepen this cooperation.

Italian passport holders are eligible to apply for a working holiday visa (subclass 417). This is a temporary visa for people aged 18-30 to holiday and work in Australia for up to a year. It encourages cultural exchange and closer ties between Australia and eligible countries. In 2015-16, 11,591 working holiday visas were granted to Italian passport holders (down 18.0 per cent on the same period in the previous year).

High-Level Visits

(Note: Positions indicated in the list below were held at the time of the visit.)

To Italy

2016

  • The Hon Julie Bishop MP, Minister for Foreign Affairs
  • The Hon Steven Ciobo MP, Minister for Trade and Investment
  • Air Chief Marshal Mark Binskin AC, Chief of the Defence Force
  • Martin Hamilton-Smith MP, South Australian Minister for Defence Industries and Investment and Trade

2015

  • Senator the Hon George Brandis, Attorney-General and Minister for the Arts
  • Senator the Hon Mathias Cormann, Minister for Finance

2014

  • The Hon Julie Bishop MP, Minister for Foreign Affairs (to attend the ASEM Summit in Milan) 
  • The Hon Steven Ciobo MP, Parliamentary Secretary to the Treasurer (to attend the ASEM Finance Ministers’ Meeting in Milan)
  • The Hon Bronwyn Bishop MP, Speaker of the House of Representatives

2011

  • Her Excellency Ms Quentin Bryce AC, Governor-General of the Commonwealth of Australia 
  • The Hon Kevin Rudd MP, Minister for Foreign Affairs 

To Australia

2017

  • Italian FREMM Frigate ITS Carabiniere visited Freemantle, Adelaide, Sydney, Melbourne and engaged in joint training activities with the Royal Australian Navy
  • Hon. Ms Roberta Pinotti, Minister of Defence
  • Hon. Ivan Scalfarotto, Under-Secretary for International Trade and Investment Attraction (accompanied by Piergiorgio Borgogelli, Director General ICE (Istituto Commercio Estero – Austrade’s equivalent – and a business delegation)

2016

  • Hon. Vincenzo Amendola, Deputy Minister for Foreign Affaris and International Cooperation
  • Italian Parliamentary Delegation
  • Dr Filippo Taddei, Senior Economic Advisor, Italian Democratic Party

2015

  • Hon. Domenico Rossi, Under-Secretary for Defence
  • Senator Benedetto Della Vedova, Under-Secretary for Foreign Affairs

2014

  • Mr Matteo Renzi, Prime Minister, visited Australia in November 2014 to attend the G20 Summit in Brisbane and to hold an investment-focused visit to Sydney

2012

  • Secretary of State Staffan de Mistura, Italian Deputy Foreign Minister (accompanied a major business delegation)
  • Dr Enrico Letta, Deputy Leader of the Italian Democratic Party

Bilateral economic and trade relationship

Italy is a significant market for Australia. It is one of our largest trading markets in the European Union (EU) and in 2015-16 was our 16th largest merchandise trading partner globally. Two-way merchandise trade in 2015-16 was $6.7 billion, in Italy's favour by a ratio of almost 8:1. Items such as wool, coal and beef dominated the mix of Australian exports. Major Australian imports from Italy included medicaments, passenger motor vehicles, and aircraft, spacecraft and parts.

Italy is Australia’s 18th largest inbound market by arrivals, and 17th by tourism expenditure. In the year ended 30 September 2016, there were 74,100 arrivals from Italy, an increase of 0.8 per cent on the previous year. Italian visitors to Australia spent $506 million in the year ended 30 September 2016 (with an average spend of $7,000 per visitor), an increase of 3.9 per cent on the previous year.

Italy is Australia’s 15th largest short-term destination. In the year ended 30 September 2016, there were 195,700 departures from Australia to Italy, an increase of 7.1 per cent on the previous year.

Italian investment in Australia is relatively low, reflecting Italy's focus within the EU and Mediterranean area. However, here has been a recent welcome interest by some major Italian companies in investing in Australia, including as an entry point to the dynamic Indo-Pacific region and as a means of achieving more balanced investment portfolios. Total stock of investment from Italian companies in Australia in 2015 was worth over $2.7bn. Australian investment in Italy in 2015 was worth almost $4.5 billion. A number of Australian companies, including Lend Lease, Macquarie, Ansett Aviation Training, QBE and Cochlear, have business interests in Italy. Westfield is investing in continental Europe’s biggest shopping mall project in Milan which, when completed, will be worth around $2bn

The Australian Trade Commission (Austrade) is the Australian Government’s trade, investment and education promotion agency. Austrade assists Australian companies to grow their international business, attract productive foreign direct investment into Australia and promote Australia’s education sector internationally. In established markets, such as Italy, Austrade focuses on investment and supports trade through referrals to specialist service providers and business advisers for assistance on a commercial basis. Austrade maintains an office in Milan. For further information, please contact Austrade in Australia on 13 28 78 or email info@austrade.gov.au.

Political overview

Italy’s constitution was adopted in 1947, following a referendum on 2 June 1946 that abolished the Italian monarchy and established Italy as a parliamentary republic. The constitution came into effect on 1 January 1948 and established a bicameral parliament (Chamber of Deputies and Senate), a separate judiciary, and an executive branch composed of a Council of Ministers headed by the President of the Council (Prime Minister). The constitution also created the position of President who is elected for a seven year term and has a largely ceremonial role.

Both houses of parliament are directly elected and are of equal authority. The electoral system in the Senate is based upon regional representation. The Chamber of Deputies has 630 members and the Senate 315 elected senators. In addition, the Senate includes former Presidents and several other persons appointed for life according to special constitutional provisions. Both houses are elected for a maximum of five years, but either may be dissolved before the expiration of its normal term. Legislative bills may originate in either house and must be passed by a majority in both.

The President of the Italian Republic, Sergio Mattarella, was elected on 31 January 2015. His appointment came after the retirement of President Emeritus Giorgio Napolitano, the only President in Italy’s modern history to be elected twice.

Following the rejection of a constitutional referendum on 4 December 2016, Mr Matteo Renzi resigned as Prime Minister. Former Foreign Minister Paolo Gentiloni was appointed Prime Minister.  Prime Minister Gentiloni has told the Italian Parliament that, domestically, his focus is on economic development, electoral law reform and improving public administration. 

Since 2006, Italians living abroad have been eligible to vote in the Italian elections. They may elect 12 members in the Chamber of Deputies and six Senators representing four overseas divisions: Europe; South America; North and Central America; and Africa, Asia, Oceania and the Antarctic. During the 2013 elections, 3.4 million Italians living abroad were eligible to vote in the lower house elections, against 3.1 million in the Senate elections. Two Australians of Italian descent were elected to represent the Oceania and the Antarctic division: Marco Fedi in the Chamber of Deputies and Francesco Giacobbe in the Senate.

Italy is divided into regions, provinces and municipalities. The constitution lists 20 regions, which are further divided into 110 provinces. Of the 20 regions, five enjoy special constitutional status: Friuli-Venezia Giulia, Sardinia, Sicily, Trentino-Alto Adige and Valle d'Aosta. The regions are responsible for electing their own regional parliaments that exercise substantial autonomy.

Economic overview

Italy is the 8th largest manufacturer in the world, the 2nd largest manufacturer in Europe and the 3rd largest economy in the Eurozone, according to “Invest in Italy”. It has a highly developed and sophisticated economy supported by a strong medium to small enterprise sector, the majority of which is family owned or controlled. While the service sector makes up over 75 per cent of the economy, manufacturing accounts for 23 per cent. After a three and a half year recession, the Italian economy grew 0.8 per cent in 2015 and by 0.9 per cent in 2016. It is forecast to continue growing at similar rates in the short term. Italy still faces some serious economic challenges. External positive factors (low oil price, weak Euro and the quantitative easing program of the European Central Bank) are tapering off. Italy has a very high ratio of home ownership and very low household and company debt, but Government debt remains over 130 per cent. Some banks need recapitalisation. In the longer term, the broader Italian banking sector may need restructuring to ensure its viability. 

Unemployment is slowly coming down, but is still around 12 per cent.

In addition, Italy is divided into a developed industrial north and less-developed south.

Foreign Direct Investment (FDI) remains below the levels achieved by benchmark competitors. Outward Italian FDI is limited and is largely concentrated in Europe and the Mediterranean.

Italian exports have been falling as a percentage of global trade. Most raw materials needed for manufacturing and a significant portion of the country's energy sources are imported.

As the first country in the world to record more people aged over 65 than under 15, Italy's low fertility rate and rapidly aging population place a strain on its economy.

Last updated: May 2017

 

Last Updated: 24 May 2017