Against a background of economic recovery, in 2006 the economy of Trentino-Alto Adige put in a strong performance, thanks in particular to the buoyancy of export demand and the improved climate of confidence among firms and households. Preliminary estimates by Prometeia and Svimez show GDP to be accelerating with respect to 2005.
Industrial output and turnover in the region increased, driven by gains in the sectors recording the largest export growth, such as metals and engineering and chemicals. After the stagnation of 2005, there was a renewed increase in investment, led by the expenditure decisions of major corporations. The growth in output was not accompanied, however, by an improvement in earning capacity, which was kept down by higher raw material costs and energy prices and the small increase in selling prices.
Signs of a slowdown emerged in the construction sector. The number of hours worked diminished, house prices rose less than the national average, and the value of public works contracts assigned in 2006 declined in the province of Trento and slowed in that of Bolzano. By contrast, there was a sharp increase in building renovations enjoying favourable tax treatment.
After two years of stagnation, there was a small increase in retail sales at current prices. Residents’ spending continued to exceed the national average for domestic appliances and furniture but, contrary to the national tendency, there was a drop in new car registrations.
Tourism and its induct made a positive contribution to economic growth in the region in 2006. The number of overnight stays continued to rise, albeit slowly; to a small extent this was due to poor weather in certain periods of the year.
Exports grew at a steady pace compared with 2005, benefiting from the economic recovery under way in the main outlet markets. In Alto Adige, in particular, sales abroad rose sharply, partly thanks to the recovery in demand from Germany.
On the labour market, employment levels remained high, in part owing to the efficiency and high standard of the region’s schools and training system. However, although employment continued to rise, the gap in the participation rate for men and women widened, with only the rate for men showing an increase.
Bank lending to households slowed, partly as a result of the increase in interest rates on medium and long-term loans. Residents’ total per capital indebtedness remains higher in Trentino-Alto Adige than in the other Italian regions.
Lending to business continued to grow rapidly, particularly in the case of large-sized firms. The growth in loans was again more marked in the medium and long-term segment but affected all sectors of the economy except agriculture, which recorded a slight drop in financing.
The quality of lending improved. Signs that some households were experiencing difficulty with the repayment of loan instalments, as evidenced by increased breaching of overdraft limits, did not lead to a rise in bad debts.
All the main components of banks’ fund-raising increased in response to interest rate levels, which were among the highest of the Italian regions. As in the rest of the country and in the euro area, deposits rates were brought into line with changes in the money market more slowly than lending rates. Overall, local households increased the volume of savings invested in securities deposited with banks for safekeeping or for management, with a preference for government paper and non-bank bonds.
The public sector continued to provide substantial support to society and the economy in the region. Local government spending, which is mainly in the hands of the autonomous provincial authorities, amounts to about one third of the region’s GDP.
