Economic conditions in the Marche region deteriorated in the course of 2008 and turned sharply worse in the fourth quarter against the background of the global recession. The impact of the downturn was heightened in Marche by the important role of industry, where the crisis was worse than in services, and by pronounced difficulties in the watercraft and electrical household appliance sectors. The recession intensified in the first few months of 2009. At the beginning of the spring, however, preliminary data, still to be treated with caution, indicated that the decline in production had halted; they were accompanied by somewhat less negative assessments by firms regarding the trend of orders.
In industry, production and turnover fell in 2008. Investment was weak. Exports contracted sharply, more than for Italy as a whole. Among the main branches of manufacturing in the region, the footwear industry suffered the smallest decline in activity. For electrical household appliances, purchases of which households can easily postpone, a sharp decline in orders came on top of pre-existing structural problems, resulting in a large contraction in activity.
The diminution in households' demand for housing was reflected in a pronounced decline in residential building and real-estate transactions, while house prices only stagnated.
The downturn also involved the service sector, albeit to a lesser extent. Retail sales, in particular, were dampened by households' limiting their purchases of durable consumer goods and by the decline in the number of tourists.
The recession did not begin to affect employment until the fourth quarter, when the unemployment rate rose above 5 per cent, which was still about two points lower than the national average. Recourse to discretionary income stabilizers, including benefits paid in derogation of the legislation in effect, rose drastically.
The crisis hit industrial firms while the productive system was still in a phase of transformation. Early in this decade a process of restructuring began that proceeded with greater intensity in traditional industries such as footwear but was nonetheless widespread throughout manufacturing. It was characterized by a reduction in the number of firms and a differentiation of strategies, with some companies pursuing product innovation, developing their marketing and after-sales assistance networks and strengthening their presence in international markets. The fall in the number of firms was accompanied by a smaller decline in employment than in Italy as a whole and a slight increase in average firm size, which is now greater than the Italian average. This process of selection was associated with more favourable indicators of growth and profitability than those for Italy. During the same period, however, firms' leverage also increased, especially in the case of small and medium-sized enterprises, which were therefore financially less solid and more vulnerable when the crisis hit.
Bank lending continued to expand in 2008 but at a diminishing pace. The annual growth in lending to households and firms fell to 6.3 and 5.4 per cent, respectively. Demand-side developments contributed to this and, in the case of firms, supply-side factors as well, with a moderate tightening of banks' loan approval standards. There was a decline in new mortgage loans to households but an increase in mortgage renegotiations and in contracts that superseded outstanding loans from other banks. Interest rates came down on mortgage loans to households but rose by nearly half a point on loans to firms; according to more recent data, in the first quarter of 2009 rates fell for both categories of borrower.
In the fourth quarter of 2008 the ratio of new bad debts to outstanding loans in the region rose to 2.6 per cent, higher than the national average, reflecting the deterioration in the quality of loans to industrial firms.
Bank funding accelerated. It was pushed up by more aggressive supply policies and also favoured, on the demand side, by the decline in the propensity to invest in real estate and by the financial market turbulence, which made alternative investments such as equities, corporate bonds, investment funds and individually managed portfolios less attractive.
