Economic developments in Trentino-Alto AdigeUpdate

The regional economy continued to grow in the first half of 2007, although with some signs of a slowdown with respect to 2006. Demand grew in manufacturing, driven by the strong performance of the export market. Expectations for the second half of 2007 are of a continuation of growth. Investment carried out in 2007 is expected to be slightly in excess of the volume planned. There was a slowdown in the construction industry, mainly attributable to a slackening of activity in the housing sector. Tourist flows increased at a rate similar to that of the first half of 2006. The growth in employment was concentrated among the female workforce, leading to a rise in the participation rate of women. Bank lending continued to slow, following the trend recorded in 2006. In the case of credit to the corporate sector, a contributory factor was the sharp downturn in the financing of real-estate operations. The growth in mortgages granted to households also slowed, but consumer credit continued to expand at a rapid pace. Credit risk indicators remained fairly low. Bank funding from households rose in line with the previous year, with an upturn in the bond component. The rise in interest rates encouraged households' to restructure their portfolios of financial assets in favour of government bonds.