In 2005 economic activity in the region slowed slightly from the previous year. According to estimates prepared by Svimez, Association for Economic Development in Southern Italy, GDP increased by 0.9 per cent at constant prices. Istat set growth in 2004 at 1.2 per cent.
In industry results were negative overall. On average for the year output declined and employment diminished, mainly in the early months of the year. Firms’ expectations regarding an upturn in demand in 2006 affected investment, which increased with respect to 2004.
In agriculture the weather had an adverse effect on output, with a decline in livestock production and in the main crops.
Growth continued in the construction industry, although at a much slower pace towards the end of the year. Output was boosted by the still favourable conditions in residential building, with households’ demand for dwellings remaining high. Non-residential building stagnated. Public works projects went ahead, although mainly in the first half of the year.
Commercial retail sales showed a slight increase and large outlets continued to grow. In services other than the retail and wholesale trade conditions were generally favourable. There was a small improvement with respect to 2004 in the tourism industry, with an increase in the number of overnight stays, especially of Italian tourists.
Foreign trade increased considerably. Both imports and exports expanded, mainly in the oil industry as trade was boosted by strong world demand for energy products. The trade deficit widened sharply.
The performance of the labour market was moderately positive. Employment increased slightly and the unemployment rate diminished. Firms reduced their use of the Wage Equalization Fund.
Bank credit accelerated with respect to previous years. The increase in performing loans concerned mainly households and the construction industry, while loans to manufacturing firms slowed in response to the performance of corporate output. The maturity of loans continued to lengthen. Interest rates on short-term finance were stable at the levels of the previous year.
The available indicators confirm that the quality of credit should improve in 2005 as well. New bad debts of firms and households diminished.
Bank fund-raising among customers resident in Sardinia accelerated with respect to the small increase of 2004. The tendency to keep highly liquid investments sharpened, with a larger increase in current accounts than in the previous year.
