The phase of weak growth that began in 2010 continued in the first half of 2011. In connection with the turbulence that hit the financial markets, the cyclical situation began to deteriorate in the autumn, and activity remained low in the first few months of 2012. According to Prometeia estimates, in 2011 Tuscany's GDP grew in real terms by 0.6 per cent, slightly more than national average.
Manufacturing activity expanded at moderate rates in the first two quarters, slowed in the third and contracted in the fourth. A better performance was turned in by large firms, by companies operating in the fashion sector and, in general, by firms able to capture demand coming from foreign markets. Exports grew over the year, particularly those to non-EU countries, partly due to the recovery of the traditional US market. Firms that had implemented internationalization strategies in previous years experienced better turnover results in 2011. Investment rose slightly, though remaining at historically low levels; it is expected to show a new decline this year.
Construction activity continued to contract, with significant repercussions on employment. The demand for houses weakened further as the economic situation worsened. In the public works sector, the long time to payment for work completed is creating problems for firms. The value of new contracts put out to tender is rising; a few large contracts account for the increase.
In services, the weakening of economic activity in the fourth quarter of last year impacted on transport and retail sales, which recorded a drop comparable to that in the first phase of the financial crisis. More positive indications came from tourism, with growth both in the influx of visitors from abroad and in their spending.
Developments in the labour market reflected the evolution of the cyclical situation. Employment grew in the first half of the year and contracted in the second, remaining broadly unchanged on average for the year. The employment rate rose among persons older than 55, while it fell for those aged 15 to 34. Analysis referring to the last three years show that a decline in youth employment is not associated with an increase in the schooling rate; the number of young persons not in employment, education or training has risen significantly. Among young university graduates who are working, many are overeducated for the jobs they hold or are working in positions requiring skills other than those they acquired in their field of study.
At the end of 2010 Tuscan households' net wealth per capita amounted to about €170,000, higher than the national average. This stock of wealth, which helps to support consumption in periods of falling incomes, consists of real assets plus the difference between financial assets and liabilities. Real assets mainly include houses, whose value rose steadly between 2002 and 2006 and more slowly thereafter. The crisis has reduced the value of financial assets.
Bank lending in the region slowed progressively during 2011, coming almost to a halt in the final part of the year and reducing in the first few months of 2012. As in the early phase of the crisis, the growth rate of credit provided by the major banking groups was lower. Interest rates rose, reflecting the rise in funding costs and the worsening of credit quality.
Demand for business loans remained slack and was limited to the needs for working capital and debt restructuring. Supply tightened in the first half, with a more severe restriction ensuing in the second; the tightening regarded the minimum rating required in order to obtain credit, the spread applied and, as in the early phase of the crisis, the amounts disbursed.
Lending to households slowed, mainly as a consequence of the drop in new loans for house purchases; here, too, the weakness of demand was coupled with a worsening in supply conditions. Medium-term analyses show that the distribution of new lending shifted partly towards less risky borrowers: the share of loans going to young or foreign households diminished.
Credit quality deteriorated further; bankruptcy proceedings increased. The flow of new bad debts in 2011 was augmented, in particular, by the defaults of some construction companies. By contrast, the households' credit quality did not show signs of deterioration; this was due in part to the support provided by banks, above all in the form of repayment moratoria, and to the still limited, though rising, presence of financially vulnerable households.
