After four years of virtual stagnation, in 2006 economic activity in the region began once more to expand. According to preliminary estimates by Prometeia and SVIMEZ, Liguria's GDP accelerated sharply with respect to 2005. Contributory factors were the fairly substantial rise in investment and more moderate expansion in consumption.
In industry, demand, particularly the domestic component, picked up progressively throughout the year. Orders from abroad grew at a slower pace, as evidenced by the standstill in exports. Production levels rose to the highest point of the last four years; output was strong in the electronics and ship-building industries and, to a lesser extent, also in chemicals and metals and engineering. According to the Bank of Italy's survey of firms, turnover increased and profits remained satisfactory at a similar level to previous years.
The signs of a slowdown in the construction industry that had appeared the year before were confirmed in 2006. Residential building was buoyed by renovation work and by the slowly expanding property market. Output diminished in the public works sector. Obstacles, some of them financial, affected the planning and carrying out of major projects under the region's general investment programmes. Work was therefore concentrated on smaller, individual town-planning projects.
After stagnating in 2005, retail sales grew moderately, both in large outlets and in traditional shops. Shipping traffic through regional ports increased thanks to a slight rise in the segment with the highest value added. As in previous years the growth was not as large as in some of the region's main competitors in the Mediterranean, which operators blamed on poor infrastructure. The number of passengers in transit through the ports was virtually unchanged, while traffic through the airports increased, albeit less than the average for the country. There was a rise in tourist flows, reversing the trend of recent years, partly in response to improvements in accommodation and other facilities. The number of visitors increased sharply, especially those from abroad and in the areas of Cinque Terre, Tigullio and Genoa.
Employment, which has been growing in the region for several years, continued to rise in 2006, partly as an effect of measures to legalize immigrant workers. The number of people in work rose in industry and in the non-retail service sector. Among new hirings, fixed-term jobs accounted for a substantially smaller proportion than the national average. There was a large decrease in the number of job-seekers and in the unemployment rate, which remains nonetheless higher than the rate for the whole North-West of the country.
Bank lending to resident customers accelerated sharply in all sectors of the economy. Consumer households stepped up their demand for credit despite early signs of an increase in the ratio of interest charges to disposable income. Bank lending to firms in the service sector and to construction companies continued to expand, while for the first year manufacturing firms also stepped up their borrowing.
Short-term loans increased in response to growing working capital requirements, but were nonetheless outpaced by the rising demand for medium and long-term credit. In the case of households, this rise was largely due to the growth in mortgage loans, while for firms it can be ascribed to the fairly low cost of extended borrowing and, in the second half of the year, to increased spending on investment. Studies of the balance sheets of firms in Liguria for the period 1997-2005 indicate that the share of long-term borrowing has been rising for several years and that this trend is accompanied by a considerable improvement in capital adequacy. This development, together with the decline in interest rates in the first half of this decade, has enabled firms in the region to increase their earning capacity.
Adjusted new bad debts again represented only a small proportion of outstanding loans at the beginning of the period. The stock of unrecoverable loans was virtually stationary, and thus declined in proportion to total lending.
Savers continued to invest cautiously. Bank accounts and repos increased, while bonds recorded a slight downturn. The nominal value of securities held on deposit with banks rose sharply; in the case of households the increase concerned mainly government paper, but among the remaining customers the value of shares and corporate bonds also rose. Net investment in units of Italian collective investment undertakings was negative for all products except flexible funds. The current value of individually managed portfolios was stationary, while the premiums collected on insurance products increased further.
In 2003-05, local government spending per inhabitant in Liguria was higher than the average for ordinary-statute regions. This was mainly due to the magnitude of per capita health spending caused by the region's particular demographics. Owing to the need to cover the sector's deficit, and to the fact that local government spending on fixed investment was slightly higher than the average for ordinary-statute regions, the share of total tax revenues in GDP was also above average.
The local government debt ratio in Liguria is generally in line with the average for ordinary-statute regions. In 2006 there was a substantial increase in borrowing, partly in the form of loans from banks and Cassa Depositi e Prestiti SpA, but largely consisting of bond issues, mainly international.
