Economic activity expanded in 2007 at a similar pace to that of the previous year. According to Svimez estimates, Emilia-Romagna's GDP grew by 2.1 per cent, slightly above the national average but well below the rate for the euro area as a whole. Domestic demand and, especially, foreign demand appear to have contributed to growth. The value of agricultural production increased further, driven up by the sharp rise in prices. In manufacturing, output rose in every sector except textiles. The growth was accompanied by an increase in investment. The construction industry continued to expand, although more slowly than in 2006 owing to the decline in the public works sector. In services, large-scale distributors achieved further gains in retail sales. Spending on durable consumer goods was flat in real terms. The region recorded a further, sharp rise in inflows of tourists, especially from abroad. Exports grew significantly, at about the previous year's rate, and outpaced world trade. The increase in economic activity had a positive impact on the labour market in Emilia-Romagna, pushing down the unemployment rate further to 2.9 per cent.
In the credit market, there was strong growth in lending to customers resident in the region, especially as regards loans to manufacturing and construction firms. There was a slowdown in mortgage loans to households and in consumer credit provided by banks, reflecting the rise in interest rates but also the greater prudence exercised by banks on the supply side. The riskiness of loan portfolios remained low, even if cases of borrowers having difficulty honouring their debt obligations appear to have become more frequent. The flows of household savings went mainly to certificates of deposits, repos, government securities and bonds.
In the first few months of 2008 orders to industrial firms have shown signs of weakening. Short-term expectations have also deteriorated. Similar signs come from the construction sector, while exports have continued to expand at a sustained pace. The greatest difficulties appear to derive from the weakness of domestic demand, which is affected by the rise in the prices of energy products and other raw materials. The data also confirm the problems of small firms in coping with growing competition in several sectors of economic activity.
The Report on Emilia-Romagna contains in-depth treatment of several aspects of the region's economic structure, including the state of implementation of the reform of local public transport, internal migratory flows and the trend in household debt in the most recent years.
In local public transport, Emilia-Romagna has progressed further than most other regions in implementing the regulatory regime introduced in 1997. Public tenders have been held in all the provincial capitals except Bologna, but operation of the service generally remains entrusted to the publicly-owned companies that already served the individual markets. Between 1996 and 2005 revenues per kilometre diminished, while costs per employee rose considerably. The percentage of the population using local public transport services, which was higher than the national average in 1996, has fallen into line with it in the last few years.
The employment opportunities that the region offers attract workers from other parts of the country. Emilia-Romagna's domestic migratory surplus in relation to the resident population is the highest among the Italian regions. Between 2000 and 2004 the net inflow amounted to almost 100,000 persons, including a high proportion of university graduates. Along with transfers of residence, in recent years there has also been an increase in the number of interregional commuters and of persons who move to another city but do not officially take up residence there. Here, again, Emilia-Romagna confirms its standing as one of the regions with the greatest power to attract people from outside.
In the period 1998-2006 households' total financial liabilities and mortgage debt rose significantly in relation to their disposable income. Nevertheless, the degree of indebtedness of the households of Emilia-Romagna is broadly in line with the national average and remains low by international standards. In the same period households' financial assets grew more rapidly than in other parts of the country. The evolution of contractual terms and conditions contributed to the growth in mortgage debt, which makes up the bulk of households' bank debt. The share of the value of the house financed with the mortgage loan, the instalment/income ratio required at the time of the contract and the possibility of renegotiating the contractual conditions were all factors tending to facilitate access to mortgage loans.
