Economic developments in ToscanaUpdate

After the strong growth of 2006, Tuscany's economy expanded at a moderate pace in the first half of this year. In manufacturing, output continued to grow, partly thanks to the contribution of exports; as in previous years, large companies and engineering firms performed best. In the construction sector, housing demand remained high, while there were signs of a slowdown in public works. Economic conditions were still favourable overall in the service sector, despite the very moderate growth in retail sales. Total employment fell owing to the decline registered in firms in the wholesale and retail trade; by contrast, employment rose in industry. Available indicators suggest that there will be a cyclical slowdown in the third quarter of the year. Bank lending to residents in the region continued to expand rapidly in the first half of the year. Short-term credit to the corporate sector accelerated given the favourable climate. There was a decline in new mortgages, reflecting higher interest rates and still rising property prices. The ratio of bad debts to total loans remained unchanged, for both the corporate and household sectors. Savers continued to show a moderate inclination for risky investments, but their decisions were affected by the opportunity cost of holding cash.