Last year saw a continuation of the cyclical expansion that began in Abruzzo in 2005. According to Svimez estimates, output expanded by nearly 1 per cent, slightly less than in 2006. The growth in GDP was below the national average, as it has been since the start of the decade. Per capita GDP is about 83 per cent of the national average, down by four percentage points compared with 2000.
In the manufacturing sector, turnover and employment increased. The improvement in orders recorded in the first half of the year came to a halt in the summer and then gave way to a downturn, which grew more accentuated in the first quarter of 2008. Developments in production were basically similar to those in orders, with a slowdown beginning in the second half.
Exports accelerated, driven by sales of transport equipment. The increase in exports reflected the good progress of sales to the rest of the European Union, in contrast with the fall in exports to non-EU markets.
In the construction sector, the signs of a slowdown in residential building were confirmed; after contracting sharply for two years, the value of public works contracts put out to tender increased. In recent years there has been increased recourse to project financing. The number of real-estate transactions fell, in conjunction with a further rise in property prices.
In the distributive sector, retail sales continued to stagnate; purchases of motor vehicles and other durable consumer goods increased. In tourism, the number of overnight stays was stable. In transport services, the activity of Pescara airport expanded further.
Employment increased by 0.8 per cent, a little less than the national average. The unemployment rate edged downwards to 6.2 per cent, in line with the national average.
Against the background of a further rise in interest rates, bank lending to customers resident in Abruzzo slowed. This involved both households and firms and extended to all the main productive sectors. New lending to households for house purchases declined slightly. The share of variable-rate mortgages fell sharply.
The ratio of new bad debts to outstanding loans decreased, reducing the unfavourable differential with respect to the national average. The stock of substandard loans (exposures to customers in temporary difficulty) diminished.
Like lending, banks' fund-raising from residents in Abruzzo slowed, partly owing to weaker growth in current accounts; the contribution of bond issues increased. The face value of regional customers' securities held for safekeeping with the banking system grew at a similar pace to the previous year, reflecting the marked increase in bonds other than bank bonds, which more than offset the slowdown in government securities and the contraction in equities and units of collective investment undertakings.
This year some structural issues that affect the region's development are examined in greater depth, in particular the following: labour productivity in industry, the educational level of the population, the role of the European Investment Bank in supporting the region's development, the financial situation of households, and firms' recourse to leasing.
In the current decade the performance of labour productivity in manufacturing in Abruzzo has been decidedly unfavourable by comparison with the national average. Analysis of the financial statement data of a broad sample of industrial companies shows that the worsening, which is found even taking into account the different sectoral structure of employment in Abruzzo, has mainly reflected the dynamics at larger companies operating in high-technology sectors. In general, the manufacturing firms that significantly increased their endowment of fixed capital per worker registered better results than the regional average.
The educational level of the population of Abruzzo has risen appreciably in the past few years. The share of the population with a high-school diploma or university degree is now higher than the national average, as is the share of public expenditure going to education. Upper-secondary education is characterized by a low drop-out rate and by the high percentage of graduates who go on to university. However, university graduates encounter difficulties in finding employment comparable to those seen in the South; a high proportion look for work in the labour markets of other regions.
Since the early 1960s the European Investment Bank has financed a large number of infrastructure projects that have helped to improve the telephone, energy and transport networks of the whole region. The volume and number of loans has diminished significantly since Abruzzo's exit from the ranks of Community Objective 1 regions.
In the present decade the rate of increase in household wealth has been higher than that in household savings in Abruzzo. This has led to a sharp increase in borrowing, especially in the form of mortgage loans. Between 1998 and 2006 the ratio of household debt to disposable income rose by about 17 percentage points, even though it remained below the national average. Per capita wealth (approximately €100,000 net of financial liabilities) stands at an intermediate position between the level in the South and the national average.
In 2006 Abruzzo accounted for 1.3 per cent of the national leasing market, with essentially no change in share over the past decade. The ratio of leasing volume to gross fixed investment rose by 8 percentage points between 1998 to 2006, although it remained below the national average. The bulk of the loans are in the property sector, which has expanded strongly in recent years, followed by equipment leasing. In Abruzzo the firms that use leasing are characterized by relatively low liquidity and profitability.
