Economic activity in the region picked up during 2006. The Chambers of Commerce estimate GDP growth accelerated to 1.9 per cent compared with 0.7 per cent in 2005. The increase was sustained mainly by the growth in exports and gross fixed investment.
Agricultural output increased slightly in nominal terms, thanks to a generalized rise in prices. Output in manufacturing improved, with orders and production up in all branches except wood products. The construction sector continued to expand, albeit at a slower pace than in the previous year. Household demand for housing remained strong, although signs of a slowdown appeared in the second half of the year.
There was an upturn in retails sales, including among small and medium-size outlets. Expenditure on consumer durables accelerated. Tourism in the region increased faster than last year, reflecting large inflows of foreign tourists. Sea freight shipping began to increase again and passenger air traffic continued to rise.
Employment growth continued, accelerating with respect to the previous year mainly thanks to the rise in payroll employment. The increase in the number of foreign workers also made a significant contribution.
Lending to customers in the region continued to expand rapidly as in the previous year. The slowdown in credit caused by the rise in interest rates and by the absence of the earlier stimulus provided by mergers and acquisitions was offset by an increase in borrowing requirements as a result of the economic recovery and continued growth of the construction sector. Consumer credit expanded at much the same rate as in previous years thanks to heavier spending on durables and the introduction of new forms of financing. The ratio of new bad debts to total loans was lower than in 2005. The increase in households' current accounts outpaced that of the previous year, driven by the growth in repos. The stock of government securities and bank bonds grew, while investment fund units and asset management funds continued to decline.
