Piedmont's GDP is currently estimated to have grown by 1.3 per cent in 2010, recovering only part of the overall decline of 7.6 per cent that Istat data show for the previous two years. The revival of industrial exports and sales is not able to make up for the losses recorded during the recession.
The expansion of industrial activity was driven chiefly by exports, whose growth was nevertheless slower than that of world trade. The Piedmont long-term growth rate of exports, as the national one, is lower than international demand and the negative differential has been growing since the second half of 2009. The gap reflects the structural weaknesses of the region's exports, including relatively low specialization in high-tech sectors, a scant presence in emerging markets and the loss of competitiveness accumulated since the start of the decade.
The rebuilding of inventories contributed to the recovery of industrial production, which had fallen to historically low levels in 2009. Firms' sales growth restarted after two years of decline, although it did not retrieve the pre-recession level; corporate profitability improved. However, investment remained weak, held down by the wide spare capacity margins and the uncertainty concerning the evolution of the economical trend.
The construction sector activity business further contracted, owing to the persistent weakness of public and private demand. The housing market number of sales modestly increased, nevertheless it remained widely below the peaks reached in 2006. A faintly positive trend in prices is associated.
The services value added is estimated to have returned to moderate growth. Trade suffered from the continuing weakness of household consumption, which was held down by the negative situation of the labour market and the stagnation of disposable income. Goods transport services grew thanks to the recovery in productive activity. The region's airports passenger traffic also increased, the tourist industry further grew up. Our analyses indicate that between 2001 and 2008 Piedmont's share of world tourist receipts, even being modest, outperformed the national average, and that over the entire decade both foreign and domestic demand for tourist services expanded significantly, simultaneously the accommodation supply grew more than proportionately and improved in quality.
In the labour market, the average number of employed people and the employment rate fell further in 2010; the unemployment rate up to 7.6 per cent is the highest among the northern regions. The improvement of economic activity reduced the amount of redundancy payment and modestly improve hiring level, due exclusively to fixed-term contracts; signals of a faint recovery in employment levels emerged in the fourth quarter. The recession has mainly affected young people, whose employment rate kept dropping; the share of young people not in education, employment or training rose significantly. The female employment rate, which fell steeply in 2009, remained practically stable last year. According to our study on women's labour market participation, the gender gap in employment rates narrowed from 2004 to 2010, although this measure of women's condition is still far from the European objectives. During the recession, the number of households with no working member increased.
According to the responses to the Bank of Italy's survey conducted in March and April 2011 among regional firms, demand is expected to grow further this year, even though less rapidly than in 2010. However, firms' high perplexity about the solidity of the current expansion affect planned investment for this year, that should remain low.
Piedmont's competitive capacity depends on many factors, including product specialization and the intensity of innovation. A comparative analysis of Piedmont with a group of European regions having similar initial social and economic conditions, shows the persistence of significant lags in human capital endowment, dissemination of training activities and production of innovations. The region's economy underperformed its peer group by a considerable margin in the period 2000-07, mainly because of the negative trend in average labour productivity. In the subsequent two years Piedmont again underperformed in terms of value added and exports.
In the two-years period of recession 2008-09, Piedmontese firms accelerated the adoption of innovative strategies. According to the Bank of Italy's surveys, almost the 40 per cent of manufacturing firms introduced innovations in production processes, product ranges or organizational and management systems; only a residual share - less than the national average - slowed the pace of innovation because of the economic contraction.
In the credit market, the lending slowdown, which began in the summer of 2008, came to an end last year. Mortgages slightly accelerate, thanks to historically low interest rates. After the significant contraction of 2009, lending to firms improved progressively during the year and returned to growth in the first few months of 2011. According to the Bank of Italy's surveys, the performance of lending to households and firms was due mainly to demand factors, while supply policies continue to be marked by caution, particularly in lending to firms.
According to our analyses on a sample of 13,000 regional firms, in the period 2008-10 the pace of lending to the productive sector was correlated with the riskiness of businesses; the growth in credit was lower for less profitable and more highly leveraged firms. The characteristics of bank-firm relationships established before the crisis also influenced firms' capability of maintaining the loans already contracted or of obtaining new ones: credit reduction involved businesses that had divided their borrowing among a multiplicity of banks; firms with only one bank relationship had less difficulty in funding.
Credit quality somewhat improved last year after the considerable deterioration registered in 2009, but it remains markedly worse than the one of the two years preceding the crisis. The mobility of credit quality, which is a gauge of the degree of uncertainty faced by banks, increased during the crisis but nevertheless remained below the national average.
The pace of bank fund-raising from households and firms slackened in 2010: bank deposits, contracted, while bond funding eased markedly. The composition of the securities held by households did not change significantly with respect to 2009: they consisted predominately of bank bonds, investment fund units/shares and Italian government securities.
