Economy of La Rossa

Economy of La Rossa

The nominal GDP of the Republic of La Rossa, published by the Giornale Economico, measured over a period from 25 TT to 42 PC. A guide for reading Rossan numerals can be found here.
Currency	Rossan Argotto
Organizations	House of Light
Statistics
Population	700,000
GDP	30.93 billion argotto (42 PC)
GDP growth	3.3% (42 PC)
GDP per capita (average)	43531 argotto (42 PC)
GDP per capita (median)	32572 argotto (42 PC)
Inflation	0.8% (42 PC)
The GDP per capita (average and median), normalized to the value of the argotto in 42 PC, measured over a period from 25 TT to 42 PC.
Poverty rate	18.3% (42 PC)
Unemployment	8.1% (42 PC)

The economy of La Rossa is a developing mixed social market economy. An internationally-emerging private market, often subsidized by the Rossan state, has been coupled with high rates of welfare ever since the revolution following the Silver Crisis, a deflationary period caused by the exhaustion of silver reserves under the island, which used to back up the nation's currency at the time. The nation's economy has been described as stagnant in recent years, owing to its high inflation rate, which often overshadows growth. The nation's median GDP per capita fell over the past decade, tought to be one of the main drivers behind the nation's declining population. Although the Rossan government only made contact with the world in 41 PC, followed by government-helped efforts to establish itself in the archipelago's market, private vessels had departed from the island for years prior, although at high travelling costs.

The period after the Silver Crisis oversaw a centralization of state power, and nationalization of major industries, most belonging to an oligopoly of the long-standing Six Families. Breaking up their ownership over the island, a sharp progressive tax was imposed upon the island's wealthy, and the money was redistributed through robust welfare programs. Although the overall economy continued to see a decline, due to the fiscal risk of investing during the reign of Dux Falcone, the period oversaw a great decrease in poverty rates, and a move towards the matching between the median and average GDP per capita, indicating a higher degree of income equality. Although inequality rose over the past decade due to privatization and freer international trade, it remains at lower levels than before the Silver Crisis.

The island's currency is the Rossan Argotto, issued by the Banca Rossa, the nation's central bank. Prior to 20 PC, the paper currency was backed by silver, with a fixed exchange rate between the two. After the silver standard was abolished by Ducissa Alessandra DeGaio, a surge of inflationary spending, matched with the privatization of recently nationalized industries, was used to revitalize the decade-stagnant economy, leading to double-digit growth rates over the following years, and a sharp increase in living standards. As the market cooled near the end of the 20s PC, higher levels of inflation overtook growth, leading to a slow decline in earnings for most citizens across the nation of La Rossa. Following two unsuccessful governments, discontent led to the election of Dux Leo Minestrici, a member of the island's past artistocracy, who vowed to breathe life back into the island nation through the slow opening of La Rossa to the international market.

Domestic Policy

La Denunzia, the popular revolution that overthrew the ruling aristocracy during the Silver Crisis, has left behind the legacy of an ever more expansive welfare state, meant to offset the prior centuries of near total wealth concentration in the hands of the few. A high progressive taxation rate permeates throughout the economy, with the revenue raised being used to fund welfare programs such as education and healthcare, government subsidies for the nation's struggling businesses, and scientific research programs. While budget cuts were made in recent years, the vast, albeit struggling welfare state remains robust. Although several national economists have criticized the high tax rates as growth-inhibiting, they have remained decently popular, in the minds of the population a way to ensure that another economic elite doesn't rise up to rule as the Six Families have a millennium ago.

Although the nation has been running a budgetary deficit for most of the past decade, compensated by higher rates of currency printing, the reigning Dux, Leo Minestrici, has introduced budget cuts in areas of welfare spending in an effort to rein in inflation, leading to a slight growth in GDP. Elected on the promise of reigniting the economy, with greater effort spent on helping local industries through tax cuts and subsidies, efforts of establishing international trade with the other islands are hoped to lead to an increase in real annual incomes, even if it comes at the cost of greater income inequality.

Income Taxation in La Rossa

0-20,000 ARG/year	20,000-30,000 ARG/year	30,000-40,000 ARG/year	40,000-50,000 ARG/year	50,000-80,000 ARG/year	80,000+ ARG/year
14%	18%	20%	24%	30%	38%

Business Taxation in La Rossa

Sector	0-240,000 ARG/year	240,000-1,000,000 ARG/year	1,000,000-2,000,000 ARG/year	2,000,000+ ARG/year
Farming	18%	20%	22%	24%
Manufacturing	16%	20%	20%	22%
Services	20%	24%	26%	26%

International Trade

Although minor levels of trade between Rossan merchants and other islands have existed since the Second Calming swept the island in 9 PC, the high costs of transport posed by a crumbling commercial navy not suited for long-distance travel created unfavorable conditions for the nation's businesses. With attention focused mostly inward for a little more than three decades, it was only in 41 PC that the Dux of La Rossa first spoke on the international airwaves. However, great efforts have been undertaken since then in order to integrate the nation into the wider market. While a set of universal tariffs has been imposed on the rest of the archipelago in an effort to allow domestic businesses to find footing in the following years, the measures undertaken are set to be temporary, allowing for freer trade between the island and the rest of the archipelago. In the meantime, the revenue earned through tariffs is used to subsidize local shipbuilding industries.