Campania did not enjoy favourable economic conditions in 2005. SVIMEZ, Association for Industrial Development in Southern Italy, estimates that GDP declined sharply at constant prices (-1.9 per cent), whereas the Chambers of Commerce and the Prometeia think tank jointly estimate slight growth of 0.2 per cent. In both cases the result was the worst since 1997.
From 2002 to 2005, the average annual growth in output was never more than half a percentage point, compared with 2.5 per cent in 1999-2002. Between the two periods the average yearly rate of increase in household consumption fell from 1.1 to 0.4 per cent. General government expenditure on consumption also slowed, from 2.7 to 1.3 per cent. The upturn in some components of public investment between the two periods could not offset the corporate sector’s low propensity to invest; the rate of growth in gross fixed investment, although still relatively high, declined from 3.6 to 2.2 per cent.
Output levels were low in 2005 in almost all the main sectors of the economy. There was a sharp slowdown in agricultural production. The agro-food industry of Campania, which is among Italy’s leading regions for volume of production in several branches, is still competitively hampered by structural weaknesses due to the small average size of its firms.
In industry value added continued to decline, although less sharply than in the previous year. The growth in turnover at current prices was slack and mainly confined to large companies and firms specializing in middle to high range products. Towards the end of the year and in the early months of 2006 orders showed signs of picking up. According to a sample survey of regional firms, although investment expenditure increased after three years of decline, the trend was not sufficiently strong or deep to justify a more determined updating of fixed capital.
The construction industry was the fastest growing in the region, thanks to progress on public works. A further contribution came from investments made under the 2000-06 Regional Operational Plan for use of Community funds, of which some two-thirds of resources are already committed.
In 2005 consumer prices in the region’s capital increased faster than in the rest of the country for the fifth year running. Retail sales were virtually stationary. Further investments were made to upgrade large retail outlets, which remain less widespread than in other regions.
In the tourism industry, overnight stays began to decline once more but cruise holidays continued to increase rapidly. Campania’s port system maintained its lead among the Italian regions for passenger traffic.
The decline in employment was more marked than in 2004, particularly among the female labour force. The gaps with the average national employment rates widened. Despite the progress made in recent years, both unit labour costs and the percentage of unregulated employment are still high compared with the rest of the country.
The rate of growth in bank lending increased for the fourth consecutive year, remaining above the national average, mainly due to the productive sectors’ larger borrowing requirements. The supply of credit was channelled principally towards firms that continued to invest despite lower profits, while maintaining a fairly sound financial situation and balance sheet structure. Unused margins on firms’ credit lines remained wide. Interest rates fell steadily until December 2005.
The rate of increase in mortgages for home purchases slowed, but was nonetheless over 20 per cent, with loans granted totalling €2.9 billion. Consumer credit provided by banks and finance companies accelerated. The ratio of household debt to GDP continued to rise rapidly but was still below the national average.
The flow of new bad debts recorded during the year remained stable in relation to the stock of loans, while the ratio of doubtful or non-performing loans to total credit declined, partly as a result of securitizations.
Bank fund-raising continued to increase at a slower pace than lending. Households again preferred to put their savings in lower risk investments. The nominal value of securities on deposit with the banks was unchanged.
