The economy and society, 1980–2006
By 1980 there were signs that the long years of economic andsocial crisis were coming to an end. Pirelli, for example, made a small proﬁt that year, the ﬁrst for ten years; Olivetti turned, just in time, to computers and word-processors. As the European recession ended in 1983-84, Northern Italy embarked on a period of rapid growth and very considerable prosperity. The Italian economy imported raw materials and exported much of its manufactures. Cheaper commodity prices – especially the falling oil price after 1986, a 1970s-style ‘oil shock’ in reverse – were therefore a huge stimulus. Manufacturing increased by 7.5 per cent p.a. between 1986 and 1991; inﬂation, over 20 per cent in 1980, still 14.6 per cent in 1983, after 1986 was at a mere 5-6 per cent p.a.; balance of payments problems disappeared; even the lira was fairly steady, having joined the European Monetary System in 1979. It was Italy’s traditional areas of strength – engineering, furniture, ceramics, footwear and clothing, ofﬁce machinery – that ﬂourished most, helped by more clandestine and even more proﬁtable activities like arms sales to the Middle East and a virtual Sicilian monopoly of the heroin trade. Even on ofﬁcial ﬁgures, Italy had become the world’s ﬁfth industrial power. Her GDP overtook Britain’s by 1987; per capita income was $15,120 by 1989, compared with Britain’s $14,610 (and the USA’s $20,630). And there was a real consumer boom at home. Economists wrote of Italy’s ‘second economic miracle’ – achieved, moreover, without any indigenous coal or oil.