Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year, a boost for its chronically stagnant economy and Prime Minister Matteo Renzi’s effort to meet deficit targets. 
 
 Drugs, prostitution and smuggling will be part of GDP as of 2014 and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said. 
 
 Renzi, 39, is committed to narrowing Italy’s deficit to 2.6 percent of GDP this year, a task that’s easier if output is boosted by portions of the underground economy that previously went uncounted. Four recessions in the last 13 years left Italy’s GDP at 1.56 trillion euros ($2.13 trillion) last year, 2 percent lower than in 2001 after adjusting for inflation. 
 
 “Even if the impact is hard to quantify, it’s obvious it will have a positive impact on GDP,” said Giuseppe Di Taranto, economist and professor of financial history at Rome’s Luiss University. “Therefore Renzi will have a greater margin this year to spend” without breaching the deficit limit, he said. 
 
 A spokesman for the Finance Ministry declined to comment on the new system. 
 
 The change in methodology will also bring research and development and arms into the GDP calculation. R&D, now considered investment spending, was previously excluded because it was classified as an intermediate cost. 
 
 To contact the reporters on this story: Andrew Frye in Rome at afrye@bloomberg.net; Chiara Vasarri in Rome at cvasarri@bloomberg.net 
 
 To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net; Jerrold Colten at jcolten@bloomberg.net Andrew Langley, James Kraus ||||| The economic value of prostitution, illegal drug sales, and trafficking in contraband cigarettes and alcohol will all be measured by Italy's national statistical agency Istat as it calculates the country's 2014 gross domestic production (GDP), it announced Thursday. 
 
 Istat said that starting in September, its 2014 economic measurements will include those three areas of illegal activities, in line with methodology being applied in measuring national accounts within the European Union. 
 
 The move updates the previous system of national account measures implemented in 1995, Istat said in a news release. Eurostat, the EU's statistical agency, has provided guidelines that will include an estimate of accounts for illegal activities including prostitution, contraband cigarettes and alcohol, and illegal drug trafficking. 
 
 Istat said it will be difficult to measure the illegal activities. 
 
 Expanding its measure of GDP to include these elements of the underground economy will likely add as much as 1% to 2% to Italian GDP, the agency said. 
 
 Measurements that increase the size of the country's GDP could be good news for the national government, for example when it calculates the ratio of the deficit to GDP.
– Surprisingly enough, this idea didn't come from Silvio Berlusconi: Italy plans to include things like illegal drug sales, prostitution, and cigarette smuggling in its GDP figures for the first time, immediately giving the size of the economy a big boost, Bloomberg reports. Prime Minister Mario Renzi has pledged to cut the country's deficit to 2.6% of GDP, a target that will be a lot easier to hit when illegal sectors of the economy are included. The European Union's statistical agency has provided guidelines for estimating the contribution of illegal activities to the economy, and the move is expected to add up to 2% to Italy's GDP, ANSA reports. (As for Berlusconi, he's doing community service at a hospice after being convicted of tax fraud.)