Economic activity in Lazio slowed during 2005. SVIMEZ, Association for Industrial Development in Southern Italy, estimates GDP growth of 0.4 per cent in real terms.
In the non-construction industry orders to firms in the region picked up slightly with respect to the previous year. The decline in the first half of the year was followed by an upturn in the second as orders for producer, capital and intermediate goods increased. The recovery in demand in the second half of 2005 spread to SMEs as well, with engineering and pharmaceutical and chemical industries showing above average gains. Firms coped with the surge in orders mainly by reducing inventories. On average, production in 2005 was below the previous year’s level, although the indicator pointed to an improvement in the second half. Qualitative indicators produced by ISAE, Institute for Economic Research and Analysis, signal an expansionary trend in the early months of 2006. Industrial firms, particularly large corporations, expect investment to increase in real terms this year. Output in the construction sector expanded steadily in 2005, in conjunction with an increase in public works as progress was made on projects launched in recent years. House prices again rose, albeit more slowly than in 2004.
Retail sales were 1.7 per cent higher in nominal terms, reflecting the small growth in household consumption. There was a large increase in tourist flows due to the rise in overnight stays of foreign tourists, mainly in the capital. Passenger traffic through the region’s airports intensified, as did passenger transit, mainly on cruise ships, through the port of Civitavecchia.
Exports of goods from the region diminished, despite the marked expansion in world trade. The branches worst affected were aerospace, transport equipment, and electronics and the decline was largest in the main European markets. Exports to the United States and China increased.
In 2005 employment grew by 0.4 per cent, more slowly than in the previous year. Growth in the construction industry and, to a smaller extent, in the service sector, was set against a decline in non-construction industry and agriculture. The unemployment rate contracted slightly.
Bank lending began to expand once more, after a small downturn in 2004. Lending to households for home purchases and renovations continued to increase rapidly given the unprecedentedly low level of interest rates. Consumer credit provided by banks and finance companies again rose sharply. Lending to the corporate sector grew at a fairly slow pace, although faster than in the previous year, with a larger than average expansion in the construction, chemical and pharmaceutical industries and in hotels and catering. By contrast, bank loans to energy companies declined.
The ratio of new bad debts to outstanding loans remained unchanged from the previous year. The slight rise in the indicator for finance and insurance companies was offset by the drop in the ratio for construction companies. In manufacturing and services the indicator was stable.
Bank fund-raising continued to expand, although more slowly than in 2004. Alongside the small upturn in current accounts there was a sharp decline in repos and bonds. The second half of the year saw a rise in net subscriptions of flexible and balanced investment funds, while disposals of equity funds were fewer than in the past.
