After the previous year’s slowdown, Abruzzo showed signs of a recovery in economic activity and employment in 2005, although not in all sectors.
In manufacturing, orders began to pick up in the second quarter. For the year as a whole, there was moderate growth in turnover and production, driven by a strong performance on the part of the high-tech sectors, which include chemicals and transport equipment. By contrast, the traditional textile and clothing and furniture sectors continued to stagnate. In the food industry both output and exports expanded. Export sales increased, for the most part due to flows to euro-area countries.
In the construction industry, the residential building sector remained dynamic, but output in the non-residential sector diminished. House prices rose again and at a faster pace than in the previous year; more property transactions were concluded than in 2004.
Agricultural output was down in most branches. Employment in the sector declined, breaking off the recovery under way for some years. The quality upgrading of local wine and oil products continued.
In the service sector, retail trade stagnated, as did tourism, with a drop in the number of overnight stays, particularly of foreign tourists. By contrast, property services made a positive contribution to the growth of economic activity.
Overall, the number of persons in work, which had been declining since 2003, began to pick up. Employment rose in all sectors except agriculture. After several years of sharp increases, use of the Wage Supplementation Fund stabilized, with a large drop in ordinary benefits. The average annual unemployment rate showed no change and was in line with the national rate.
Bank credit continued to expand rapidly as interest rates held at unprecedentedly low levels; another contributory factor was the sharp rise in lending to consumer households and building firms. Most of the growth in credit was in the medium and long-term segment, a tendency under way for some years.
The stock of bad debts decreased, mainly as a result of securitizations. The ratio of flows of new bad debts to the initial stock of loans declined. Unused margins on short-term credit lines were generally large, although they narrowed in some branches, such as building, and on loans for smaller amounts.
With household income growing only moderately, bank fund-raising slowed, mainly reflecting the sharp downturn in the flow from bond issues. Residents continued to show a marked preference for highly liquid assets, such as current accounts. There was a small increase in indirect sources of funds, which had been declining steadily for several years. Funds in asset management increased, while the stock of securities held in safekeeping diminished.
There was a further rise in the number of bank branches operating in the region, bringing the total ratio to the population close to the country’s average. Just under half the branches belong to banks with their head office in the region, which increased their share of the local loans and deposits market during 2005.
