The economic and financial crisis intensified in the fourth quarter of 2008. The Italian economy recorded a fall in GDP on average in 2008, and economic activity continued to contract rapidly in the early part of 2009 as well.
The Prometeia and Svimez institutes estimate that Valle d'Aosta's GDP fell by about 1 per cent in 2008. According to Istat, it had expanded by 1.9 per cent in 2007, thanks to the growth in the service sector that more than offset the decline in industry. The contraction in demand to industrial firms in the second half of 2008 affected output and investment decisions. The deterioration was especially severe in the metal engineering industry, automobile-related sectors and construction. Exports diminished in 2008: the slump involved metals and metal products in the first half of the year and then spread to other products.
Construction firms benefited from an increase in public works projects but suffered from the weakening of private demand as the real estate market contracted. House prices in the region fell in the second half of the year. Between 2002 and 2007 they had risen faster than in the rest of the North-West, on average. In 2007 real per capita households assets in the region were the fourth-highest in Italy, consisting mainly in housing and, to a lesser extent, in the capital of producer households and in land.
The cyclical difficulties were also reflected in the service sector, with a decline in sales (very pronounced for motor vehicles), the stagnation of tourism and a decrease in the number of cars passing through the region on motorways.
Employment increased modestly in 2008. The unemployment rate rose slightly but remained one of the lowest in Italy. The number of hours of Wage Supplementation paid increased in the last part of the year and soared in the first quarter of 2009. In recent years, a contribution to the growth of employment in Valle d'Aosta has come from the foreign component, mainly employed in traditional sectors, especially hotels and restaurants, and in construction. The growth of the region's resident population too has been due in part to foreigners, who now number nearly 7,000. The high proportion of women and children suggests a strengthening and stabilization of the immigrant population.
Bank lending slowed down, overall. For consumer households the slowdown was steady starting in March 2008, and for firms there was a significant fall in the rate of growth in the last quarter, owing in part to the contraction in average sales by regional firms. The trend in loans to consumer households reflected the performance of home mortgage lending, together with a reduction in consumer credit. The riskiness of credit diminished when measured by new bad loans, but there were signs of a deterioration in credit quality, namely a sharp rise in sub-standard and overdue loans and in the overdrawing of credit lines.
Investors continued to prefer low-risk financial instruments. Bank deposits and investment in bank bonds increased again. Government securities and non-bank corporate bonds expanded rapidly, while investment in equities, portfolio management services and investment fund units fell again.
The regional government took a series of measures in support of households and firms, consisting mainly in the suspension of the year's instalments of home mortgages with the regional finance corporation, an increase in guarantees to loan guarantee consortiums, tax relief and bonuses for needy households. The region also approved eco-incentives, cumulable with those of the central government, for the scrapping of old motor vehicles and permits to increase the size of hotels and similar facilities.
