From the fourth quarter of 2008 the international economy has undergone the deepest recession since the Second World War. Italy is the only major European country to have seen annual GDP decline already in 2008. Economic activity continued to contract very sharply in the first part of 2009.
In Molise as in the rest of Italy, the economic situation worsened abruptly in 2008. Estimates by Svimez and Prometeia indicate that the decline in GDP in real terms was in line with the national figure (-1.0 per cent).
Activity contracted across the economy but most markedly in industry. Some 60 per cent of the industrial firms interviewed for the Bank of Italy's survey reported that they had been affected by the crisis to a significant extent. Firms sought to cope with the downturn primarily by curbing costs. Against a background of uncertainty and declining current and expected demand, investment plans for 2009 were cut back.
After growing in the first three quarters, exports collapsed in the fourth (down by about 25 per cent), reflecting the performance of the fashion sector, the region's industrial mainstay. The negative trend steepened in the first two months of 2009.
The signs of a slowdown in the construction sector that had already emerged in 2007 solidified in 2008, owing in part to the let-up in public works activity. Transactions in the property market slowed; real-estate prices fell in real terms.
Household consumption decelerated, especially spending on durable goods.
After two years of expansion, employment ceased growing in the second half of 2008, which saw a decline in jobs in industry. The effects of the crisis emerged faster in industry through the reduction in hours worked. Recourse to the ordinary wage supplementation fund rose considerably in 2008; the number of hours authorized held at very high levels in the first few months of 2009.
Lending to firms slowed progressively in 2008, reflecting both demand factors, mainly associated with the reduced need for loans to finance investment, and supply factors. According to a survey conducted in the early months of 2009 by the Campobasso branch of the Bank of Italy, banks operating in Molise moderately tightened their standards for approving loans to firms in the course of 2008. The rate of growth in lending to households fell to 6.2 per cent, mainly as a consequence of weaker demand for loans for house purchases. Although some signs of deterioration have emerged in the first few months of this year, in 2008 loan quality was not significantly affected by the economic downturn. Since December 2008 bank lending rates have been gradually adjusting to the reduction in official rates.
