Economic activity in the region was again slack during 2005. According to estimates by the Promoteia think tank and Svimez, Association for Industrial Development in Southern Italy, Liguria’s GDP increased slightly at constant prices, recouping the decline of the previous year.
In industry, demand and output picked up during the year, although according to firms levels were still below normal. Exports rose substantially at current values, mainly driven by the structurally erratic trend of ship-building and the favourable performance of the energy sector. A few large corporations, particularly in the latter sector, increased their turnover, while that of other industries was stationary. Investment spending was affected by the uncertain prospects and, contrary to firms’ initial forecasts, did not increase.
The construction industry made a positive contribution to economic growth, albeit a smaller one than in previous years. Output diminished in the public works sector, which had been boosted in recent years by projects to modernize the city of Genoa. Residential building, on the other hand, expanded rapidly thanks to rising property prices and a robust demand for housing in response to low interest rates.
The service sector, which had made a large contribution to the growth in value added and employment in recent years, did not perform well during 2005. Slack household consumption caused retail sales to stagnate, with only large outlets recording an increase. Shipping traffic through regional ports was stationary at the previous year’s levels, with a small rise in container goods. Unlike the main European ports, those in Liguria benefited little from the growth in international traffic, partly because of poor infrastructure. By contrast, there was an increase in the number of passengers in transit, but only in the cruise sector, which is expanding rapidly in the Mediterranean.
Overnight stays diminished again, with fewer arrivals of either Italian or foreign visitors. As in previous years, tourist flows declined owing to stronger competition, also in terms of prices, from other seaside resorts and to the unfavourable trend in households’ disposable income.
Employment in the region rose slightly, partly thanks to the residual effect of measures to legalize immigrant workers. Flexible jobs accounted for a large proportion of hirings. The unemployment rate, which was higher than in the North-West of the country, remained stationary.
The growth in bank lending to resident customers resumed after the virtual standstill of the previous year. The expansion was attributable to consumer and producer households and to non-financial corporations as there was a further decline in lending to general government. Bank borrowing increased among firms in the service sector and construction companies, but was slightly down in manufacturing, reflecting the weak performance of investment.
Credit demand was concentrated in the medium and long-term segment, as in the previous five years, partly owing to the reduced cost of extended borrowing. Short-term loans were again badly affected by the unfavourable economic situation and by the satisfactory levels of profits and cash flow revealed by an analysis of the financial statements of a sample of regional firms. Accounting entries for the three years 2002-04 also indicated a progressive reduction in leverage among both large and small firms and a decrease in the burden of financial debt.
In 2005 the ratio of adjusted new bad debts to outstanding loans at the beginning of the period narrowed considerably after the large increase of the previous year. The stock of unrecoverable loans also diminished, although this was the result of disposals of non-current bank loans of regional customers. Without these operations bad debts would have shown an increase and their ratio to total regional lending would have been unchanged from the level of twelve months earlier.
Bank fund-raising continued to reflect the cautious attitude of savers. While idle funds in bank accounts and repos increased, bonds, which had expanded rapidly in recent years, recorded a slight downturn. The nominal value of securities on deposit with banks for safekeeping and management was stationary. The drop in investment in government securities was offset by the growth of other components, particularly units of money market funds. Individual portfolio management by banks contracted further, particularly the part invested in units of collective investment undertakings.
