Italy - Country Commercial Guide
Investment Climate Statement
Last published date:

The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are, or could be, markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and takes steps to combat corruption. The reports cover topics including openness to investment, legal and regulatory systems, protection of real and intellectual property rights, the financial sector, state-owned enterprises, responsible business conduct, and corruption.

Executive Summary

(Note: some economic conditions may have changed since publication in July 2023 and differ from those described in this Country Commercial Guide)

The eighth largest in the world, Italy’s economy is globally competitive in the areas of business and financial services, agricultural and food production, fashion, design, tourism, and industrial production including of vehicles and ships. Italy’s economy proved resilient to high energy prices and overall inflation in 2022, growing 3.7 percent. Robust growth in the construction sector, which benefited from tax credits for eco-friendly renovation projects, as well as rebound of the tourism and services sector, helped drive the overall expansion. Russia’s full-scale invasion of Ukraine exacerbated a pre-war trend of rising energy prices. Continuing supply-chain constraints, tighter monetary policy conditions, inflation, and Russia’s full-scale invasion create uncertainty affecting consumer and investor confidence. Italy forecasts its economy, the euro area’s third largest, will grow by 1.0 percent in 2023 and 1.5 percent in 2024. Public debt was 144.4 percent of GDP in 2022 and projected to decline to 141.4 percent in 2024, progressively declining from 155 percent in 2020.

Italy’s National Resilience and Recovery Plan (NRRP), which runs from 2021-2026, combines over €200 billion in EU funds to accelerate the digital and green transitions coupled with wide-ranging reforms addressing the Italian economy’s longstanding drags on growth – including its slow legal system, convoluted tax administration, and bloated bureaucracy – while rebalancing policies to address gender, youth, and regional disparities. To date, Italy has received €67 billion in EU grants and loans as part of the NRRP. Further disbursements will be dependent on Italy’s achievement of EU-agreed milestones and targets. The government has had difficulty in spending the funds as quickly as planned due to a lack of administrative capacity, a known risk factor that the NRRP seeks to address through reforms and increased capacity of the public administration, and a changing economic landscape following Russia’s full-scale invasion of Ukraine. For U.S. investors, judicial reform and bureaucratic streamlining would minimize uncertainty and create a more favorable investment climate.

Italy is, and will remain, an attractive destination for foreign investment, with one of the largest markets in the EU, a diversified economy, and a skilled workforce. Italy’s economy is dominated by small and medium-sized enterprises (SMEs), defined as firms with less than 250 employees. SMEs comprise 99.9 percent of Italian businesses. Italy’s relatively affluent domestic market, access to the European common market, proximity to emerging economies in North Africa and the Middle East, and centers of excellence in scientific and information technology research, remain attractive to investors. The clustering of industry, the infrastructure, and the quality of life are also among the top reasons international investors decide to start or expand a business in Italy. According to Italy’s Institute of Statistics, in 2020 over 15,600 foreign multinationals employed 1.5 million Italian residents.  Foreign companies account for 18 percent of Italian GDP and 14 percent of investments. Exports of pharmaceutical products, furniture, industrial machinery and machine tools, electrical appliances, automobiles and auto parts, food and wine, as well as textiles/fashion are an important source of external revenue. Sectors which have attracted significant foreign investment include telecommunications, transportation, energy, and pharmaceuticals. The government remains open to foreign investment in shares of Italian companies and continues to make information available online to prospective investors.

2023 Investment Climate Statement Italy (full report)