After expanding in 2006 and the first half of 2007, economic activity in Liguria slowed in the second half of the year, in line with the national trend. As largely confirmed by local economic and financial operators, however, some structural features of the region's economy (for example, only moderate openness to foreign trade, the dominant role of the service sector, and a prudent approach to the allocation of savings) help to determine a cycle that is partially attenuated and lagged with respect to the national economic cycle. The forecasts of economic and financial operators for the current year are unfavourable: given the persistence of critical factors (high cost of oil and other commodities, turbulence in the international financial markets, the appreciation of the euro), the local economy is expected to weaken.
Despite the deterioration in the second half, the industrial sector benefited from relatively strong demand for the year as a whole. A contribution came from foreign demand; the rapid growth in exports was buoyed by an increase in both the average quality and the value of the products exported. After a long stagnation, investment grew at the end of 2006 and in the first part of 2007; in the most recent months growth weakened.
Activity in the construction sector continued to be driven by private building, especially for the renovation and restoration of housing and for residential projects along the Riviera. House prices registered an adjustment and the time needed to complete transactions lengthened. The public works sector remained stagnant; the development and execution of major investment programmes continued to encounter obstacles, mainly of a financial nature, and so activity centred on small-scale urban projects.
Cargo traffic increased in the region's ports, thanks in part to the acceleration in container traffic, especially in Genoa. However, the growth failed to match that recorded by the "Northern Range" ports and by some leading Mediterranean competitors, partly because of the scant expansion of the domestic economy. The improvement in port facilities and logistics infrastructure could enable Liguria's ports to expand the areas they serve.
Retail sales remained weak; large-scale distributors alone achieved a small increase in sales of food and mass consumption products. The number of overnight stays at regional lodging facilities was about the same as in 2006; a slight increase in the number of arrivals, especially of foreign visitors, was offset by a shortening of the average stay.
There was further growth in employment, boosted by the regularization of immigrants. The rate of increase in the number of persons in work was higher than the national average, particularly in manufacturing industry and distribution for payroll employment and services other than distribution for self-employment.
Bank lending grew at a slower pace than in 2006. The slowdown can be ascribed mainly to consumer households: the rise in average mortgage loan rates and the less dynamic conditions of the real estate market dampened households' propensity to borrow. The bad debt rate on bank loans to households stayed low, although an increase in substandard loans and the frequency of renegotiations and late payments may be signs of greater difficulty.
Firms' recourse to credit continued to expand significantly, especially as regards firms in residential building and the service sector. The bad debt rate, higher than for households, declined; the flow of other substandard loans was small. The increase in lending to the productive sector was concentrated in the medium and long-term component. The progressive lengthening of the average maturity of Ligurian firms' bank debt, also evidenced by their financial statements, is encouraged by the favourable terms and conditions of long-term bank credit compared with short-term loans. The average interest rate on the latter is higher in Liguria than both the national average and the average for the regions of the North-West. The difference is due mainly to the composition, by firm sector and size, of the local productive system, which is unbalanced towards small firms; in addition, the incidence of bad debts is greater in Liguria than in comparable regions.
The allocation of savings, traditionally marked by a moderate propensity to risk, grew more prudent than in the preceding years. Banks' fund-raising increased, albeit with a slowdown in current accounts due to the greater opportunity cost of holding liquidity. Among securities held with the banking system for safekeeping, bonds and government securities grew, while there were further net redemptions of harmonized investment fund units.
