In Abruzzo, the economic recovery that got under way in 2010 gradually slackened in the course of 2011 as the world economy slowed and the sovereign debt crisis intensified.
Industrial production expanded over the year as a whole, though at a slower pace than in 2010, thanks to the resilience of exports in Abruzzo's main sectors of specialization. According to recent Bank of Italy surveys, manufacturing firms that had adopted internationalization strategies in response to the crisis generally showed better-than-average results. Given the ample margins of spare production capacity, investment continued to be restrained by the weakness of domestic demand and, from the summer onwards, by the mounting financial tensions.
In the final part of the year, a deteriorating macroeconomic picture and uncertainty as to the evolution of market conditions prompted firms to cut back their production and investment plans for 2012.
In the construction sector, output declined again in spite of the measures for reconstruction in the area hit by the 2009 earthquake. In private construction, activity was held back by the continuing fall in property sales and, for non-residential building, by the stagnation of business investment.
The weak dynamic of income and the poor conditions of the labour market negatively affected consumption; in recent years, moreover, the rate of growth in households' net wealth has fallen sharply in Abruzzo.
Employment grew during the year on average, but showed signs of slowing in the fourth quarter. Though gradually declining, the percentage of employed workers who benefited from wage supplementation remained at historically high levels. Since the start of the crisis the employment rate has risen among the older age groups, partly as a result of the progressive raising of retirement age; conversely, it has fallen for the younger strata of the population, despite their high level of educational attainment and generally satisfactory academic performance. The unemployment rate came down a bit in 2011, falling into line with the national average, but it is still high among the younger age groups.
After increasing in the course of the year, the twelve-month rate of growth in loans to firms declined in the last quarter of 2011, reflecting weak investment demand and a more cautious stance of the banks in granting credit. Larger firms accounted for all of the modest growth in loans to businesses; loans to small firms diminished. The cost of credit rose at all maturities and in all branches of the economy.
Lending to households slowed sharply, especially as regards house-purchase loans. Household debt has increased in the last decade in relation to income, but it is lower than the national average. The low level of interest rates helped to limit the financial vulnerability of households in the region.
Although banks' exposure to regional firms reported to be in default for the first time diminished in 2011, it remains higher than it had been before the crisis.
Households' bank deposits slowed progressively during the year, with current accounts declining. At the end of 2010 nearly half of the financial assets belonging to households in the region consisted of cash, bank deposits and postal savings; this share was greater than the national average and had grown compared with the pre-crisis years.
