Economic developments in Friuli-Venezia Giulia in the year 2005
Annual report
Economic activity in Friuli Venezia Giulia stagnated in 2005. In industry, demand continued to grow at a slow pace, after contracting in 2002-03. Total sales increased by 1.2 per cent at constant prices from 2004, losing impetus during the year. Regional steel and ship-building companies continued to benefit from the expansionary demand cycle, while the engineering industry was overtaken by uncertainty. Small firms in the wood and furniture industry continued to experience difficulties.
The performance of production followed that of sales, with inventories of finished goods remaining stationary. Despite weak demand growth, firms generally kept to the investment plans drawn up for 2005, increasing their expenditure on fixed capital by 7.5 per cent in nominal terms. After a lengthy postponement of decisions, firms resumed investment in tangible assets. There was a further increase in net profitability.
In 2005 exports from the region decreased by 2.5 per cent at current prices. Excluding the ship-building industry, which has long production cycles, export flows were up 5.1 per cent on the previous year.
In the construction industry output declined slightly with respect to 2004. Public works were at a standstill and the protracted expansion of residential building came to a halt, while no progress was made on large-scale infrastructural work planned earlier. Property prices continued to rise.
According to Istat’s labour force survey, the number of persons in work increased by 0.8 per cent between 2004 and 2005, while the unemployment rate edged up from 3.9 to 4.1 per cent. The Bank of Italy’s surveys show a drop of 1.7 per cent in payroll employment in industrial firms with 20 or more employees, compared with an increase of around 3 per cent in non-bank private service firms.
Employment declined in the construction industry.
Goods traffic through the port of Trieste was up 1.7 per cent in 2005. Container traffic grew at a considerably slower pace than in Italy’s other ports or in competing ports in Slovenia and Croatia.
Demand for bank credit by firms in the region slackened. Slack growth in short-term finance, which is closely linked to the business cycle, was combined with a sharp slowdown in medium and long-term credit. Between the end of 2004 and 2005 the manufacturing industry reduced its bank debt by 6.5 per cent, but credit to construction and service firms continued to expand. Lending to households again performed strongly. New home-purchase mortgages rose by a further 4.2 per cent and consumer credit from banks and finance companies was up by almost 20 per cent.
The stagnation of economic activity did not affect the quality of credit. Flows of new bad debts fell in 2005, both in absolute value and as a ratio of outstanding loans at the beginning of the period, thanks to a decrease in those pertaining to firms, mainly in agriculture and industry. Net of disposals, non-performing bank loans decreased by 1.4 per cent.
Bank fund-raising in the region increased by 5.5 per cent. Funds from consumer households slowed to 0.5 per cent at the end of 2005 as the decline in bank bonds was combined with only a small rise in bank accounts. The 4.5 per cent drop in households’ securities on deposit with banks for safekeeping and management involved almost all types of financial instruments. Net subscriptions of Italian investment funds were negative by €172 million.
Revenues of the Autonomous Region of Friuli Venezia Giulia, net of its operating surplus, increased by 7.4 per cent in 2005, to €4.7 billion. The rise can be ascribed mainly to the region’s share of national taxes and to its own non-tax revenues. Expenditure, which totalled around €4.8 billion, showed no change from the previous year. The borrowing requirement fell by 11.8 per cent, to €271 million.
Full text
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21 April 2007
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