In 2005, economic activity in Sicily was stationary overall, despite the positive signals coming from the construction and tourism industries.
In agriculture output of many of the main crops declined. Producer prices for vegetables continued to fall, eroding the earnings of local growers.
In industry performance was poor, with levels of both orders and production below normal. On average, the firms interviewed for the Bank of Italy’s annual survey reduced their investments in machinery and equipment. The growth in turnover was virtually nil in real terms.
As in the previous year, the construction industry enjoyed favourable conditions again in 2005. In the public works sector, there were new starts on building projects financed with funds allocated under Agenda 2000, while in the private sector stimulus was provided by new investment in hotels and commercial facilities.
The retail and wholesale trade was affected by the still moderate growth in consumption of Sicilian households, registering a further decline in the value of sales. Tourism flows continued to pick up and were boosted in 2005 by the strong performance of foreign tourism.
Regional exports continued to expand, notably those of oil products, chemicals and food.
The number of people in employment increased in the leading sectors. However, as at the national level, the figures for the island could reflect the regularization of foreign workers. In percentage terms, flexible, fixed-term and part-time jobs increased at the fastest pace. Although the unemployment rate fell, it remained nonetheless the highest in the country.
Bank lending again expanded rapidly and the maturity of loans was progressively lengthened. There was also a large increase in credit granted by intermediaries listed in Article 107 of the Banking Law. The expansion in bank lending involved both consumer households, mainly owing to the volume of property market transactions, and firms; loans to the latter increased significantly and at a faster pace than twelve months earlier, particularly in the case of small enterprises.
Credit conditions remained easy. Interest rates on bank loans diminished slightly, reaching exceptionally low levels.
The proportion of bank loans reclassified as bad debts was in line with the moderate values recorded in the previous three years. The bad debt ratio decreased further owing to the large expansion in lending and above all to the substantial transfers of non-performing loans that were made during the year.
There was a moderate expansion in bank fund-raising, in line with that recoded in 2004. The share of highly liquid products increased, and the proportion of funds raised with firms grew, while that raised with households diminished. The average return on current accounts remained unchanged.
At the end of 2005 there were 70 financial intermediaries present in Sicily, 3 more than a year earlier, while the number of banks whose head office is located in the region rose from 34 to 36.
The increase in the number of branches involved only regional banks. Use of internet banking continued to spread as a result of wider private access to computers.
