The international economy has been in a deep recession since the fourth quarter of last year, when the crisis worsened. Italy's GDP already contracted in 2008 and continued to decline rapidly in the first half of 2009. After a long expansion, employment began to fall; recourse to the Wage Supplementation Fund reached historically high levels. Banks, large ones in particular, found it increasingly hard to raise funds on the international markets. Lending in Italy slowed, mainly reflecting the fall in demand. In the last quarter of the year it was also affected by the tightening of supply conditions.
The economic and financial crisis had significant effects in Basilicata, but the recession's impact on the economy was weaker than in other areas of the country. According to SVIMEZ estimates, GDP fell by 0.5 per cent in real terms in Basilicata, compared with 1.1 per cent in the South and Islands and 1 per cent nationally.
According to the survey conducted by the Bank of Italy in the first few months of 2009 on a sample of manufacturing firms based in the region, two thirds of the respondents consider the current crisis more severe than previous recessions. More than one third indicate that turnover has fallen by more than 20 per cent. Most manufacturers expect the present difficulties to be gradually overcome over the next twelve months. They expect both turnover and investment to begin to recover this year.
Employment was hit by the recession in the closing months of the year. The expansion recorded in the first nine months of the year contrasted with a pronounced drop in the fourth quarter (-2.3 per cent on the previous quarter). Recourse to the Wage Supplementation Fund rose considerably in 2008 and continued to grow rapidly in the first quarter of 2009.
After two years of strong expansion, exports fell by 6.6 per cent in 2008, reflecting the sharp drop in those of cars (-23.8 per cent) and furniture (-31.9 per cent). Furniture exports had peaked in 2004. Their performance since then has been affected both by the appreciation of the euro and by growing competition from producers in South-East Asia.
Activity in the private building sector suffered from the unfavourable performance of the real estate market. The decline in the number of house sales was less pronounced in Basilicata than in Italy as a whole (10.6 per cent, against 14.8 per cent).
In retail trade, the contraction in consumption had a stronger impact on smaller shops; in large-scale retailing, the trend of sales was slightly positive only for food products. In tourism, overnight stays were flat last year after growing in 2007.
Agricultural production rose slightly despite the reduction in the area under cultivation. Farm businesses, which make up 37 per cent of all firms based in Basilicata, diminished further.
Lending to firms accelerated in the first four months of the year but then slowed progressively, to a twelve-month growth rate of 7.2 per cent in December. Between February and March 2009 the Bank of Italy conducted a survey on credit demand and supply at more than 400 banks. The 33 banks operating in Basilicata indicated that in the fourth quarter they had moderately tightened their standards for approval of loans to firms. The tightening regarded all the terms and conditions of credit, although it more marked for the interest rates applied to riskier customers.
The slowdown in lending to firms mainly concerned banks belonging to the five largest banking groups, which rely more than other intermediaries on wholesale funding markets and were thus hit harder by the intensification of the financial crisis. The effects were the strongest for firms with fewer than 20 workers. Preliminary data for the first quarter of 2009 point to a widespread credit slowdown involving firms of every size and banks of every type. Lending to households slowed even more rapidly, with credit demand affected by the fall in real-estate transactions and consumption of durable goods. Credit quality worsened for firms, while it remained at about the previous year's levels for households.
Firms' problems are exacerbated by the long waiting-time for payments due from general government. In Italy as a whole, such claims are estimated to amount to 2.5 per cent of GDP. Collection is slower in the South and Islands. In Basilicata, where public spending plays a larger role than in Italy as whole or in the other regions of the South and Islands, the impact is likely to be particularly strong.
From the standpoint of financial resources, Basilicata benefits from the royalties on oil and gas extraction. The region accounts for three quarters of all domestic on-shore production. The zone involved covers about a quarter of the region's area. Between 2002 and 2008 royalties amounted to just over €450 million. Of the €350 million allocated for the period 2003-08 to the Val d'Agri, Melandro, Sauro and Camastra Operational Programme, largely financed with royalties, about one fifth has actually been spent to date.
