In 2006 the performance of industry and services in Friuli Venezia Giulia was satisfactory, while in the construction industry output diminished slightly.
Demand in industry, which had been slack in 2004-05, accelerated sharply, with total sales up 7.6 per cent at constant prices on 2005. The region's steel industry continued to benefit from the expansion in demand, despite the rise in raw material prices and unfavourable exchange rate. The furniture industry showed signs of recovery and output remained strong in the ship-building sector.
The increase in industrial production did not keep pace with that in sales (4.4 per cent), leading to a decline in inventories of finished goods. Gross fixed investment decreased by 8.2 per cent in nominal terms. Profitability in industry remained satisfactory.
In 2006 exports from the region increased by almost 14 per cent at current prices thanks to sales of machine tools and by the steel and ship-building industries.
According to ISTAT's labour force survey, the number of persons in work increased by 3.1 per cent: the rise in employment in industry excluding construction and in the service sector was partially offset by a decline in the construction industry. The unemployment rate fell to 3.5 per cent. Intervention by the Wage Supplementation Fund fell by half.
Freight traffic through the port of Trieste rose slightly in 2006. Container traffic continued to increase, but at a slower pace than in competing ports in Slovenia and Croatia.
Between the end of 2005 and the end of 2006 demand for bank credit grew in connection with temporary transactions undertaken by finance and insurance companies. In the other sectors bank credit rose by 6 per cent. Credit demand for home purchases by households in the region was robust, with a 7.2 per cent increase in new mortgages. Consumer credit continued to rise rapidly.
Lending to the corporate sector accelerated after the previous year's slowdown associated with early repayments. However, demand for credit by non-financial companies decreased as a result of the decline in gross fixed investment and the satisfactory liquidity and cash flow conditions. Bank lending interest rates were raised in line with market rates.
In 2006 flows of new bad debts rose from 0.6 to 0.8 per cent of outstanding loans at the beginning of the period. The increase can be attributed mainly to the industrial sector, where information from balance sheets indicates that there is a concentration of firms with a relatively worse financial situation, particularly if they are of small size. New bad debts of households also increased, from 0.5 to 0.6 per cent of outstanding loans at the beginning of the period.
Bank fund-raising in the region increased by 3.6 per cent. Funds from households accelerated from 0.5 to 5.1 per cent between the end of 2005 and the end of 2006 as the increase in bank bonds was combined with a further growth in bank accounts. There was a small increase in households' securities on deposit with banks, which included a growing proportion of government and non-bank bonds but fewer shares and investment fund units.
Expenditures and revenues of the Autonomous Region of Friuli Venezia Giulia, net of its operating surplus, were virtually stationary in 2006 compared with the previous year. On the revenue side, the rise in tax revenues and in the region's share of national taxes was offset by the sharp decline in other forms of revenue. On the expenditure side, the slight decline in expenditure on the regional economy was accompanied by a rise in financial debt amortization and other costs.
