No. 12 - Economic developments in MarcheAnnual report

In 2010 the economy of the Marche region began to grow again, albeit at a modest rate. According to Prometeia estimates, regional GDP expanded by 1.3 per cent, in line with the national average. The recovery was more vigorous in the first half of the year and then slowed.
The picture this report depicted a year ago showed a recovery that was weak and circumscribed to some outstanding firms well present in the international markets, even thanks to strategic changes undertaken in the last decade. This overall situation continued to prevail in 2010; disparities among firms, in terms of performance, remained significant. Signs of recovery come mainly from firms that have reviewed their strategy, repositioning themselves in the reference markets even during the crisis, and have engaged in process and product innovation.
Exports returned to growth, gaining 11.2 per cent, but recouped only 40 per cent of the loss recorded in 2009. Since the start of the crisis the region's export performance has been systematically worse than the Italian average.
Industrial production expanded by 3.6 per cent. Activity grew both in the hard-hit machinery and equipment and electrical home appliances industries and in the footwear sector; it stagnated both in the wood and furniture sector and in textiles and clothing. Production was about 10 per cent below its 2007 average levels.
After contracting sharply in 2009, gross fixed investment in industry returned to growth. In a situation of marked uncertainty and still ample spare capacity, firms' expectations suggest that capital spending will be weak in 2011.
Construction activity declined again. The number of house sales was about a third below the pre-crisis peaks; prices held at their 2008 level. Turnover recovered more vigorously in services, but with different trends from sector to sector: in wholesale and retail trade, sales again reflected a decline in durable goods purchases; in transport, goods traffic made slow progress; in the tourism sector, the number of overnight stays turned upwards in all segments of the hotel industry.
The return to robust employment growth is impeded by production levels still well below the pre-crisis levels and by the large number of employed workers still receiving wage supplementation benefits. Developments differed across sectors: there was employment growth in services but another decline in industry excluding construction.
Especially in industry, the period before the recession had witnessed appreciable employment growth, accompanied, however, by a disappointing trend in labour productivity. With the recession, both productivity and employment declined in industry.
In 2010 bank lending to both households and firms expanded, albeit modestly. The increase in lending to firms reflected a slight recovery in demand, stemming mainly from debt restructuring and consolidation, and, to a lesser extent, from firms' needs to finance working capital. The conditions of loans to firms were practically unchanged in 2010 and still marked by caution. The growth in lending to households was driven by loans for house purchases, which in the first half of the year benefited from stronger demand and from the halt in the tightening of supply conditions.
The riskiness of loans to firms based in the region, measured by the ratio of new bad debts to outstanding loans, continued to diminish but remained above the regional average for the two years before the recession and higher than the national average. However, the share of loans in temporary repayment difficulty edged up. Bankruptcy procedures increased; the insolvency rate, calculated as a ratio to active firms, is one of the highest in Italy.
A decline in households' disposable income was again an impediment to financial saving. Bank funding was weak and its pace slowed with respect to twelve months earlier; the fall in deposits was offset by a slight increase in bonds.