Economic conditions in Marche deteriorated abruptly in the second half of 2011, interrupting the slow recovery from the end-2008 recession. The contraction in economic activity was particularly acute between the last quarter of 2011 and the first quarter of 2012. The dataset now available suggests that the current recession, like its predecessor, is deeper in Marche than in Italy as a whole. The expectations expressed by businesses interviewed by the Bank of Italy suggest the decline will come to halt in the coming months, but there is a high degree of uncertainty as to the strength of the recovery.
Industrial firms recorded weak growth in turnover for the year as a whole, less than in 2010; the rate of increase was lower for small companies. Turnover fell in the household goods sector (furniture and household appliances), which suffered from households' curbing of spending on durable goods; it grew, albeit slightly, in the footwear industry, where a process of strategic repositioning had already been launched before the crisis.
Foreign demand held up better than domestic demand, although the growth in exports failed to match the national average: the gap, which had opened with the recession, continued to widen. In the last quarter of 2011 the region's exports were still one fifth below the pre-crisis level.
Gross fixed investment by industrial firms, which had already fallen to low levels in 2009-2010, remained practically unchanged in 2011; with the turn for the worse in general economic conditions in the autumn, firms revised down their investment plans for 2012.
Turning to the other sectors, the problems seem greatest in construction. In the real estate market, the number of transactions declined again and house prices fell in real terms. Activity also weakened in the service sector under the impact of the broadly based curbing of consumption.
The employment outlook worsened. A sharp fall in employment in industry and construction was offset only in part by the gain in services. The unemployment rate rose to 6.7 per cent, 2.5 points above the average figure for 2008, before the crisis began, but it nevertheless remained below the national average. The deterioration in the employment situation was greatest for young people, regardless of their level of education.
Human capital is a decisive factor for returning to rapid growth. The region's school system ranks high in Italy in terms of both population's level of education and students' performance on achievement tests.
The pace of bank lending began to flag in the third quarter: at the end of the year bank lending was broadly unchanged from a year earlier, and in March 2012 it recorded a slight decline. A weakening of demand was accompanied by a tightening of banks' lending standards. The slowdown in lending to firms was sharper than that in lending to households, notably for small enterprises in the construction sector and riskier firms. Banks report that supply conditions became slightly more expansionary in the first half of 2012.
Credit quality, measured by the ratio of new bad debts to outstanding loans, was broadly stable in 2011 and better for households than for firms. However, the percentage of loans in temporary repayment difficulty increased, especially for construction companies. The ability to repay debts declined above all for firms that before the crisis already had a much higher leverage than the average. The percentage of financially vulnerable households has risen during the crisis, but not much, thus remaining low at all events.
Banks' fund-raising from customers resident in Marche, including both deposits and bonds, grew modestly. In the second half of the year, given increasing difficulty in obtaining financing on the interbank market, banks adopted supply policies designed to stimulate purchases of certificates of deposit and the opening of deposits with agreed maturity. In counterpoint to the growth in bank lending, individually managed portfolios and securities held for custody and administration at banks declined; an exception was Italian government securities, which resumed growing as a share of households' financial assets.
The net real and financial wealth of households in the Marche has stagnated since 2009, halting the expansion recorded in the five previous years, when it had been pushed up in part by rising house prices. It nevertheless remains high by international standards, as it is for Italian households in general.
