San Marino, which is said to be the world’s oldest republic, is a tiny country landlocked by Italy. At only 23.6 square miles, San Marino is the fifth smallest country in the world, only larger than Vatican City, Monaco, Nauru and Tuvalu. It is also one of the richest countries in the world, with an estimated 2016 GDP per capita of $59,500. Despite its wealthy status, the 2008 recession, from which the country is still recovering, has significantly increased poverty in San Marino.
San Marino’s main economic activities are tourism, banking and the manufacture and export of different goods such as clothing, ceramics, fabric, wine and spirits. As it is surrounded by Italy, most of San Marino’s economic sectors are highly supported by this nation; in fact, 90 percent of San Marino’s export market is supported by Italy. As Italy also suffered from the 2008 recession, its demand for imports from San Marino has lessened, which has in turn weakened San Marino’s economy.
After the recession, San Marino’s strong economy took a downward turn. Unemployment – which had been at its lowest in 2007 at three percent – jumped to 4.5 percent by 2009 and reached its peak of 9.2 percent in 2015. While poverty is not a major issue in San Marino compared to many other countries, the recession certainly caused a notable increase.
Although San Marino’s poverty rate is low enough that it is not necessarily significant enough to be recorded, it is likely that such a rapid increase in unemployment led to hardship for a significant portion of San Marino’s population. Increases in unemployment cause greater stress for the individual and strain the government, as it puts more pressure on the government to support those who are unemployed. Additionally, it weakens the economy further, as those who are unemployed lose purchasing power. Since San Marino’s peak unemployment in 2015, unemployment has started to drop, with the unemployment rate in 2016 at 8.6 percent.
Although the recession caused an increase in poverty, the government of San Marino has been working to curb the effects of the recession by eliminating its status as a tax haven. As other countries have bounced back from the recession, demand for goods from San Marino has increased as well. Hopefully, as more countries start recovering, this will also help San Marino’s economy recover so that progress can be made regarding its poverty rate.
– Mary Kate Luft
Photo: Flickr