Italy’s economic freedom score is 60.6, making its economy the 83rd freest in the 2013 Index. Its overall score is 1.8 points higher than last year due to gains in labor freedom, control of public spending, and investment freedom that outweigh worsened monetary and business freedoms. Italy is ranked 36th out of 43 countries in the Europe region, and its score is above the world average.

The European sovereign debt crisis has seriously affected Italy’s macroeconomic stability. Sharp increases in the debt burden, aggravated by structural and institutional weaknesses, continue to erode long-term competitiveness. With public debt around 120 percent of GDP and growing, policy options are increasingly constrained. Due to the complexity of the regulatory environment and the high cost of conducting business, considerable economic activity remains in the informal sector.

Despite some reform progress that has enabled Italy’s economy to regain the status of “moderately free,” institutionalization of greater economic freedom has been uneven and largely ineffectual. The foundations of economic freedom remain weak in the absence of an efficient judicial framework to provide effective and timely resolution of cases. Corruption, often involving government officials, is a growing concern, severely undercutting confidence and trust in the government.