The economic recovery that Italy had enjoyed in 2010 came to a halt in 2011. From the summer onwards the sovereign debt of several euro-area countries, including Italy, came under pressure, making repeated budget adjustments necessary. Economic activity slowed sharply, the macroeconomic forecasts were revised downwards, and uncertainty increased among businesses.
Sicily suffered from the deterioration in the national macroeconomic context, whose repercussions were felt in the main sectors. In manufacturing, investment diminished significantly and the percentage of firms that made a profit for the year decreased. Exports, which had continued to grow during the first half of the year after staging an appreciable recovery in 2010, slumped abruptly in the fourth quarter.
In the construction sector, the downtrend continued, with further declines in activity and employment. House prices fell in real terms and the number of sales declined.
According to Prometeia estimates, value added in services showed anemic growth. Positive signs came from tourism, where the recovery in overnight stays by foreigners gained pace and spending by visitors from abroad increased after three years of decline.
Employment fell for the fifth consecutive year; the regional unemployment rate remained one of the highest in Italy and recourse to wage supplementation grew further. Over a fifth of the young university graduates in work hold jobs for which they are overeducated and a third are employed in positions unrelated to their field of study. In the region's primary and secondary schools, moreover, students' achievement levels, evaluated by the Invalsi and PISA surveys, are below the national average and the average for the southern regions for all school grades.
The worsening in the economic situation was reflected in the weakness of credit demand, together with a tightening of supply conditions by banks, which were also faced with the deterioration in loan quality. The outcome was a letup in bank lending to the regional economy, especially evident in the second part of the year: lending to both households and firms slowed.
The riskiness of loans to firms grew worse: the flow of new bad debts increased in relation to outstanding loans. Leading indicators suggest that credit quality could continue to deteriorate: debtor positions characterized by repayment difficulties have increased and so have the movements of loans to worse classes of risk.
Bank deposits diminished slightly, particularly those held by firms in the form of current accounts. The rate of growth in households' financial wealth slackened in the three years 2008-10, reflecting, among other things, the decline in value of equities and investment fund units.
In recent years, the need to contain costs, in connection with the difficulty cyclical phase, has slowed the expansion of banks' branch networks and stimulated the growth of alternative channels, such as ATMs and home and corporate banking services.
