The economy of the Marche region slowed down in 2007. Svimez estimates regional GDP growth at 1.8 per cent, higher than the national figure but 0.5 points lower than in 2006. As recorded in the latest surveys, firms' opinions regarding the short-term outlook suggest that the weak cyclical phase is likely to persist in 2008.
The slowdown in activity was widespread. According to a Bank of Italy survey, in 2007 the turnover of industry rose, largely as a result of the increase in selling prices, which were driven up by the rising costs of energy and raw materials. Among the main branches of industry, the increase in production was higher than average for furniture and mechanical machinery, especially for products other than household appliances, and lower for footwear. Some indicators suggest that further progress was made by industries that are newer to the region, such as watercraft and energy. Gross fixed capital formation weakened. In construction, production value contracted after a long period of expansion; house prices were stable nearly everywhere. Lastly, there was growth in services, though considerably less than in the previous year.
The increase in the number of persons in work (1 per cent) was largely the result of new part-time employment contracts in services. The unemployment rate edged downwards to 4.2 per cent.
According to calculations based on Eurostat data, over the longer period 1996-2005 the growth in nominal per capita GDP at purchasing power parity was lower than the European average in the Marche region, as in Italy as a whole. The region's gap vis-à-vis Europe can be traced to the poor performance of labour productivity in all sectors. Within industry, a process of qualitative transformation has begun, albeit in a context of slow improvements in productivity. According to the surveys conducted by the Bank of Italy in the last two years, firms have stepped up their product renewal and investment in brands, devoted more resources to developing their marketing and post-sales-assistance networks, and strengthened their presence in international markets. In parallel with this transformation and in part owing to the large economies of scale associated with investment in intangible assets, the differences in the progress of firms have depended less on the sector to which they belonged than on their size, to the advantage of larger firms.
Firms' competitiveness is also influenced increasingly by the quality of resources made available by the community. The last three years have seen closer relations established between companies and universities, even though the latter are still rarely a source of information for firms' innovation activity. Public investment in infrastructure has also increased, narrowing the gap with the national average.
The growth in bank lending eased to 8.1 per cent in 2007, from 9.5 per cent in 2006. The slowdown was sharper in lending to households, in connection with the deceleration in house purchases. Lending to firms returned to a higher rate of growth than that to households, although also it slowed somewhat in connection with the evolution of economic conditions and the modest pace of investment. The rates on loans gradually adjusted to the rise in money-market yields.
The ratio of new bad debts to outstanding loans at the beginning of the period rose from 1 per cent in 2006 to 1.4 per cent, reflecting a worsening in the risk attaching to firms, which nonetheless is still at low levels. By contrast, the quality of loans to households remained stable; faced with repayment difficulties, banks often renegotiated mortgages, altering both the interest rate and the length of the loan.
Banks' fund-raising from households of the region rose to growth of 6.8 per cent (6.3 per cent in 2006) on the strength of the recovery in bond sales, which more than compensated for the feeble increase in current accounts. The decline in liquidity preference, ascribable to the rise in money-market yields, was accompanied by a shift out of asset management products. Investment in government securities and corporate bonds grew as a result, capturing the outflows from individually managed portfolios, investment funds and life insurance policies. Compared with the national average, the portfolios of households of the region include a higher proportion of bonds and bank and post-office deposits and a lower proportion of shares and investment fund units.
