No. 13 - Economic developments in LazioAnnual report

Economic activity in Lazio recovered in 2010 after contracting sharply in the previous year. According to Prometeia estimates, regional GDP grew by 1.2 per cent, in line with the national average, making up only part of the drop of more than 3 per cent recorded in 2009.
Demand and production in industry grew moderately, while firms' stocks of finished products continued to shrink. Export orders recovered more strongly than domestic orders. In the first quarter of 2011 demand was basically flat; firms' expectations for the trend of orders improved somewhat.
Foreign trade was a strongpoint of the regional economy. Exports of goods increased, driven by the consolidation of the expansion in Germany and the United States. Most of the growth came from high-tech sectors, especially pharmaceuticals. There were also export gains for some traditional industries (basic metals and metal products, food processing, furniture, textiles and clothing).
According to our surveys, fixed investment by industrial firms based in Lazio recovered slightly in 2010 after falling steeply in 2009. There are stronger signs of growth in capital spending among export-oriented and technologically-intensive manufacturing firms. The low capacity utilization rate and the uncertain outlook for demand are brakes on investment plans for 2011.
Activity in residential building declined in 2010 except for maintenance and restructuring work, which increased. New public works contracts put up for tender decreased in both number and total value.
Retail trade reflected the weak growth in households' disposable income and consumption; new car registrations fell and sales of other durable goods declined. Employment in the sector decreased.
The gradual improvement in international economic conditions helped to boost the number of overnight stays by foreign visitors in Rome; the inflow of visitors from elsewhere in Italy also grew, albeit to a smaller extent. Passenger and freight traffic through Lazio's airports picked up.
The region's average level of employment rose in 2010. The growth was due to the foreign component and concentrated in industry and construction. Employment in services diminished slightly. The number of wage supplementation benefit hours authorized was up sharply in the first half of the year and then turned downwards. The unemployment rate rose, owing to the increase in the male component. The percentage of young people aged 15 to 34 not in education, employment or training increased in the three years 2008-10, although it remained below the national average.
Bank lending to customers resident in Lazio, more or less flat in the first half of 2010, picked up in the second. The expansion reflected greater recourse to credit on the part of general government, financial companies and households; in March 2011 lending to non-financial firms also showed a rising trend.
The growth in lending to households reflected that in home mortgages, three quarters of which at variable rates. Consumer credit granted by banks and financial companies diminished.
Bank interest rates on medium- and long-term loans bottomed out in the first part of the year and then stabilized at their end-2009 levels; interest rates on short-term loans decreased slightly.
After the deterioration in credit quality immediately following the financial crisis, the ratio of new bad debts to outstanding loans at the start of the reference period stabilized in 2010 at the end-2009 values for firms and households alike. The indicators of credit risk based on exposures to borrowers in temporary difficulty (substandard loans) signal the persistence of delays in loan repayments.
Bank fund-raising in Lazio diminished. Firms' holdings of liquidity fell, while funds raised from households remained broadly stable. As to the composition of households' financial assets, the share of investment funds grew, in part thanks to the rise in market prices from the lows of the previous year, while the share of savings invested in Italian government securities diminished.
The number of bank branches in the region was trimmed by corporate restructurings and branch network rationalization programmes. The number of municipalities served by at least one bank was unchanged. The number of loans and that of accounts per bank branch increased.