The recession that began in Molise in the fourth quarter of 2008 worsened last year. The latest estimates by Svimez and Prometeia indicate that regional GDP fell by between 4 and 5 per cent in real terms in 2009. All sectors of economic activity were affected, household consumption declined, investment diminished, and exports at current prices fell to the lowest levels of the last decade.
The recession hit manufacturing hardest, with a greater impact on the branches that were already structurally weak. The decline in foreign demand worsened the difficulties of the fashion industry, which spread to the entire regional production chain. Building activity contracted; the number of hours worked, as reported to the construction industry's joint welfare funds, fell to five-year lows. The service sector was also affected by the downswing.
The state of the labour market worsened rapidly. After a prolonged phase of growth, demand for labour declined despite extensive recourse to income-support measures. The fall in employment mainly involved payroll workers and fixed-term employees.
At the end of 2009 the stock of bank credit was lower than twelve months earlier, even net of the effects of one-off statistical reclassifications. There was a significant difference in the trend of lending to firms and to households.
Lending to firms diminished. Firms' borrowing requirements were modest, reflecting the weakness of economic activity, while banks were more cautious in assessing creditworthiness. The decline in lending was more pronounced for large firms. Collective loans guarantee consortiums played an important role in helping small firms gain access to credit.
Lending to consumer households slowed, mainly as a consequence of persistent sluggishness of demand. New loans for house purchases picked up moderately; the increase only regarded loans at variable rates.
Loan quality deteriorated significantly. The difficulties of the regional fashion industry were a factor in the growth of non-performing loans. Excluding the fashion sector, the ratio of new bad debts to outstanding loans rose but was in line with that in the other regions of the South and Islands.
In the context of a national budgetary policy oriented towards curbing expenditure, the monitoring of health care costs at local level has become increasingly important. Since 2007 the region of Molise has had an adjustment plan to deal with structural imbalances in health care operations; in addition, there is provision for the ministries of health and the economy to assist in management. The State Audit Office, among others, has found that the containment of spending in the first three years of the plan is still insufficient to ensure structural balance; this could lead to further increases in the rates of the main regional taxes.
The measures called for in the plan include, in particular, reorganization of the extremely widespread hospital network and completion of the rationalization of procurement of goods and services.
