Italy has a new plan to meet it's tough deficit targets - start calculating illegal operations as part of its gross domestic product.

The announcement by state statistics office Istat mean that activities like drug trafficking, smuggling and prostitution will now significantly boost Italy's GDP, thereby diluting the deficit ratio.

This will make it easier to reach Prime Minister Matteo Renzi’s goal of reducing the deficit to 2.6 per cent of GDP this year.

Estimates will be used, due to the obvious difficulty in measuring undeclared income.

Organised crime is a significant force in Italian society, particularly in southern regions of the country. In 2012, the value of Italy's illicit economy was put at almost 11 per cent of GDP.

This statistical boost should help Italy steer well clear of the three per cent deficit limit imposed by the EU.