San Marino, said to be the world’s oldest republic, is a small country landlocked by Italy. At only 23.6 square miles, it 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 2021 gross domestic product (GDP) per capita of $54,982.45. Despite its wealthy status, the 2008 recession, from which the country is still recovering, has significantly increased poverty in San Marino.

The 2008 Recession

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 Italy surrounds it, most of San Marino’s economic sectors are highly supported by this nation; in fact, 90% of San Marino’s export market is supported by Italy. Italy also suffered from the 2008 recession, so 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 3% – jumped to 4.5% by 2009 and reached its peak of 7.9% in 2017. However, after significant efforts and initiatives, San Marino’s unemployment rate declined to approximately 5% in 2022. While poverty is not a major issue in San Marino compared to many other countries, the recession certainly caused a notable increase.

Unemployment

Although San Marino’s poverty rate is low enough that it is not necessarily significant enough to be recorded, such a rapid increase in unemployment likely 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.

Final Remark

Although the recession increased poverty, the government of San Marino has been working to curb its effects by eliminating its status as a tax haven. Notably, the country’s nonfinancial sector recovery, which started in 2014, has placed its economy in a strong position to face shocks.

Furthermore, 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
Updated: May 29, 2024