The year 2005 was not particularly satisfactory for the economy of Molise. Preliminary estimates by Svimez, Association for Industrial Development in Southern Italy, indicate a decrease in GDP. Domestic demand was slack and productive investment declined, while some support came from the strong performance of demand in the property market and of exports.
Agricultural output diminished. There was a sharp drop in the number of firms in operation, combined with a decline in employment. Industrial output stagnated as a result of crises in the engineering, metals, and textiles and clothing branches.
According to Istat’s consolidated accounts for the region, in 1999-2004 the industrial sector’s share of total value added fell by over 2 percentage points, to 17.4 per cent. In the construction industry, residential building benefited from strong demand for new dwellings. In public works, the increased output of firms located in Molise was partly due to contracts in other regions of Italy. In the service sector retail sales were virtually unchanged despite a further growth in large outlets. Tourist flows declined again.
The number of persons in work decreased, mainly as a result of the large downturn in agriculture and services. The unemployment rate fell owing to reduced participation in the labour market.
In 2005 bank lending increased at a slower pace than in the previous year. The growth was driven by the medium and long-term segment, partly owing to corporate operations to match the maturity of loans. The expansion in credit was largest among construction and service companies, while lending to manufacturing diminished, chiefly in the food and textile and clothing industries.
Loans to households continued to increase, although not as rapidly as in 2004. The rate of downgrading to bad debts was again exceptionally high. Bank fund-raising increased, partly thanks to the larger volume of liquidity held by manufacturing firms.
