In 2007 the Campania region registered weak growth in GDP at constant prices, estimated at 0.5 per cent by Svimez and 1.1 per cent by Prometeia. In either case, the rate of increase was lower than those recorded in the Centre and North on the one hand and in the other regions of the South on the other, continuing a trend under way since 2003.
At mid-decade the regional economic indicators showed disappointing results also relative to the other backward regions of Europe. In the ranking by per capita nominal GDP, calculated by Eurostat at purchasing power parity, between 1995 and 2005 Campania fell from 38th to 52nd place among the 60 regions that at the start of the period were beneficiaries of the EU Structural Funds for Objective 1 regions.
The weakening of economic activity in Campania last year involved all the main productive sectors. Household consumption continued to grow at a very modest rate, while investment slowed. Exports confirmed their good performance of 2006, but in volume terms were still below the level they had reached in 2002.
The growth in value added in industry fell to 0.5 per cent at constant prices according to Prometeia estimates; during 2007 and in the first few months of 2008 the cyclical indicators showed a progressive deterioration. The increase in turnover observed in a sample of companies headquartered in the region came to 2.1 per cent in real terms, half as great as in 2006. Between 1995 and 2005 the increase in value added per worker in industry, at current prices and purchasing power party, was less than one fifth that achieved in the other backward regions of Europe. Investment by industrial firms slowed noticeably in 2007. In the first half of the decade the volume of investment per worker was lower than in the other southern regions, while the amount of public subsidies for investment was comparable to that in the rest of the South.
Last year, for the first time this decade, the growth of activity in construction underperformed the average for the other sectors. Value added slowed to 0.2 per cent at constant prices according to Prometeia estimates. Realization of the sector's potential continues to be hindered by delays in the programmes for renewing and upgrading important urban and outlying areas. In public works, investment in transport infrastructure again played the driving role. In the property market, the volume of transactions fell.
Developments in services were basically in line with those of the past few years. In a context of persistently weak consumption, large-scale distributors increased their market shares; nevertheless, their presence remains significantly less extensive than in the other southern regions on average. According to provisional data from the provincial governments, tourist flows recovered, although not enough to alter Campania's marginal position with respect to the main tourist regions of the Mediterranean. Port activity showed good growth, as in the past few years. Prospectively, however, the position of Campania's ports is weak by comparison with European competitors, owing to their under-endowment of infrastructure and the insufficient development of long-distance intermodal links.
The regional economy's low growth accentuated the imbalances in the labour market. The number of persons in work decreased by 0.7 per cent in 2007; in the last four years it has diminished by 2.4 per cent, compared with an increase of 2.7 per cent in the rest of the South and of 4.6 per cent in the Centre and North. The employment rate among the population aged 15-64 fell to 43.7 per cent in 2007. In the last four years the gap with respect to national average has widened from 12 to 15 percentage points. The gap vis-à-vis the other backward regions of Europe is equally serious.
The quality of human capital in Campania in terms of educational attainment is significantly below the average for the other economically backward regions of Europe.
In 2007, for the first time this decade, bank lending to resident customers decelerated, its rate of growth falling from 15.6 to 7.7 per cent. The slowdown, which continued in the first few months of 2008, involved all customer segments and reflected both less expansionary lending policies and a lower propensity to borrow on the part of firms and households. The cost of money on short-term loans rose from 7.5 to 8.3 per cent between December 2006 and December 2007. The interest rate spread with respect to the national average held constant at 1.1 points for short-term loans; it was smaller (less than 0.5 points) for medium and long-term loans. According to estimates based on financial statement data, in recent years firms have resorted to bank credit to satisfy about 60 per cent of their external funding needs. Household debt has more than doubled since the start of the decade, but as a ratio to disposable income it remains below the national average, owing primarily to the lower percentage of indebted households. The default rate, measured by the change in banks' bad debts, was low again by historic standards but rose during the year. Signs of an increase in risk can also be seen in the growth in substandard positions (not defaulted but presenting repayment difficulty).
Excluding interest and financial items, central and local government expenditure in the territory of Campania in 2006 amounted to just above €8,600 per capita, roughly €2,000 less than the national average. Between 2003 and 2006 current expenditure in Campania grew by 4.4 per cent per year, while capital expenditure diminished by 3.2 per cent per year. In 2007 local government debt in Campania rose by €2.4 billion to €11.5 billion, or from about 9.7 to 12 per cent of regional GDP and from 8.5 to 10.3 per cent of total Italian local government debt.
