The fall in output and in foreign demand in 2009 was compounded from April onwards by the effects of the earthquake that struck the regional capital, L'Aquila, and the surrounding area. A year after the earthquake, a chapter of the Report provides an overview of the housing situation, the reopening of schools, the resumption of productive activity and the start of reconstruction.
According to Svimez estimates, the contraction in Abruzzo's GDP came to nearly 6 per cent, exceeding the already large decrease recorded for Italy as a whole.
In manufacturing, the decline of activity grew more pronounced in the first half of 2009. Subsequently, activity showed some signs of a modest recovery, fueled by domestic orders and, to a lesser extent, foreign demand. However, the revival of production is still only partial and is limited to a minority of firms.
The value of exports fell by almost a third in 2009 compared with the previous year, more steeply than for Italy as a whole or for the South and Islands. The decline, which eased in the second half, mainly reflected the performance of exports to the euro-area countries, the principal foreign outlet market for the region's products. Among the hardest-hit sectors were transport equipment, electronics and traditional "made in Italy" export goods.
Given high margins of spare capacity and pronounced uncertainty on the markets, manufacturing firms sharply reduced fixed investment. The forecast for the current year do not point to a rapid recovery of capital spending.
In industry, signs are emerging that the companies that undertook restructuring and changed strategies in the years preceding the crisis have performed better in the most recent period in terms of turnover growth, investment and employment.
In construction, the contraction in activity regarded both private building and public works. In the second half of the year, public works activity was buoyed by tenders connected with the start of reconstruction in the earthquake-struck areas, whose beneficiaries included firms based in Abruzzo.
In the service sector, there was a marked decrease in the inflow of tourists, especially in the months immediately after the earthquake. Activity in wholesale and retail trade stagnated, reflecting the weakness of household consumption. Activity in the transport sector declined moderately, held down by the contraction in industry and tourism. Services were the sector of the economy where the earthquake did the most damage. The historic centre of L'Aquila, where the majority of commercial, professional and craft activities are based, is still largely closed to the public. Only some businesses have succeeded in starting up again in new premises.
In the labour market, the decline in employment was considerably steeper than the national average. It was greater in services and among women workers, while it was less pronounced in industry, where the exceptional increase in recourse to the Wage Supplementation Fund cushioned the impact of the crisis on employment levels. The unemployment rate soared to well above the national average.
New types of income support, such as wage supplementation granted under a waiver, most of whose beneficiaries were workers temporarily idled by the earthquake, were applied on a wide scale in Abruzzo.
In the credit market, in line with the developments at national level, bank lending to resident customers declined, more markedly in the case of large banks. Against the background of sharply lower investment, credit to the productive sector contracted. Lending to consumer households continued to expand, albeit at a moderate rate. Loans for house purchases stagnated; they only began to show signs of reviving in the fourth quarter of 2009.
The need to preserve the quality of their assets appears to have induced banks operating in the region to adopt stricter credit standards. Nevertheless, the survey conducted by the Bank of Italy's branches indicates that banks' lending standards became progressively less restrictive in the course of the year.
Loan quality was affected by the protraction of the weak cyclical phase. New bad debts rose in relation to outstanding loans in all the main sectors by comparison with the end of 2008. The share of substandard and overdue loans increased.
Bank funding accelerated, reflecting the large increase in current account deposits of local savers, whose propensity to hold liquidity remained high.
