The global crisis had widespread effects on the economy of Emilia-Romagna in 2009. According to Prometeia estimates, GDP contracted by 5 per cent, in line with the national average. The region, particularly open to foreign trade and specialized in producing capital goods, was hit hard by the collapse of world trade and investment during the recession. By contrast, household consumption in the region declined less than the national average.
Industrial production fell by 14 per cent, according to Unioncamere estimates. The decline involved all the main sectors and all size classes of firms. Industrial investment contracted more than in 2008, falling by 20 per cent in connection with the pronounced uncertainty concerning the evolution of the business cycle and the low plant capacity utilization rate. Exports shrank by nearly 25 per cent in nominal terms, slightly underperforming the Italian average. After the cyclical low reached in the spring of 2009, the available indicators signal a gradual improvement, though they are still deeply negative. Construction activity diminished further both in residential building and in public works.
In service sectors, the crisis had a more limited impact. Retail sales, as estimated by Unioncamere, fell by nearly 3 per cent overall; the decline was steeper for durable goods and for small and medium-sized outlets. Tourism held up fairly well thanks to domestic flows, which made up for the brusque decline in tourists coming from abroad.
In the labour market, the contraction in production was reflected in a large drop of 4.6 per cent in hours worked. The decline in employment was smaller (1.2 per cent) as a consequence of massive recourse to the Wage Supplementation Fund and other means of reducing working hours. The deterioration intensified during the year. The unemployment rate stood at 5.7 per cent at the end of 2009, compared with 3.4 per cent a year earlier; including workers receiving wage supplementation, the idle portion of the labour force amounted to 7.4 per cent, 3.5 percentage points more than a year earlier.
The fall in employment was concentrated among fixed-term workers, many of whom are young and live with their parents, a situation that helped to cushion the effects of the loss of income due to the job loss.
After years of rapid growth, bank lending slowed sharply from the second half of 2008 onwards. At the end of 2009 the twelve-month change in bank lending to residents in the region was negative by 1.1 per cent. Lending to firms fell more sharply, especially loans to manufacturing firms. On the demand side, the diminution in companies' borrowing requirements as a result of the fall in investment was only partly offset by the increase in the demand for loans in connection with debt restructuring. Banks maintained a restrictive supply policy, motivated chiefly by the increase in customers' riskiness. The tendency to tighten credit standards abated among large banks, while it persisted for small ones. Lending to households slowed but expanded nevertheless, especially as regards mortgage loans. The riskiness of loans to firms continued to rise, reaching highs for the decade. The risk on loans to households increased but was still at historically low levels.
The economic crisis and the fall in interest rates induced a reallocation of the deposits of households and firms towards the more liquid components.
The prospects remain uncertain. In industry and services, the business outlook surveys for the first few months of 2010 report a pick-up in activity from the end of last year. Uncertainty as to the timing and the strength of export recovery weighs on the manufacturing sector, however. As for domestic demand, consumption could be adversely affected by the further decline in employment that firms expect for the current year. Banks expect the tightening of supply conditions to come to a halt in the first half of the year. However, the progressive deterioration in loan quality and rating downgrades in response to the figures disclosed in annual reports for 2009 could have a negative impact on supply conditions.
