In 2005 for the Veneto, as well as for Italy (Note 1), real growth in GDP was estimated at close to zero (+0,1%). The dynamics remained positive, albeit only slightly, thanks to the essential contribution of household spending (+1%), government spending and that of private social institutions (+0.9%). Gross fixed investment, as on a national level, decreased (-1.9%).
As regards the dynamism of sectors, only the value added of services is increasing (+1.2%), while all other sectors are witnessing a decrease of wealth produced. The value added generated by the agriculture sector lost nearly 5 percentage points, the industry sector in a narrow sense lost 1.1%, and even the value added of construction, after several very positive years, did not change (–0.6%). A rise in the region’s GDP is predicted (+1.4%) for 2006, stimulated mainly by a growth in investments.
Drawing indications from the recent slump of the Italian economy is certainly no easy task (Note 2), but beyond the short-term, a more moderate growth in expenditure can generally be seen, in line with what other European countries are witnessing. It is worth considering that precautionary saving is on the increase, in some countries as a consequence of the high unemployment rate, in others due to news of welfare reforms (whether carried out or not), and in other countries due to the fast aging of the population and uncertainties regarding the perspective self-sufficiency that this entails. In Italy the faster aging of the population in comparison with other European countries and labour market reforms led to a phase of near stagnation of production, but this did not interrupt the systematic reduction of the unemployment rate. There is, however, a general tendency for irregular productivity in the industry sector: for all divisions, apart from energy, 2005 was a year of decline compared with 2004.
A gradual recovery of the Italian economy is thus forecast for 2006: growth of the GDP (around +1%) will be supported mainly by components of internal demand, with a 1.9% increase in investments, above all in the most innovative component of machinery and vehicles (+2.5%), and household spending (around +1%). In exports, the prediction of a further strengthening of the euro against the dollar should partly limit the progress of sales abroad.
Household spending in the Veneto therefore grew, above all in durable goods (+7%). This is due not only to the increase of high-tech innovative products on the market, but also to the increased availability of financing for consumer credit. The services component also grew (+1.2%), while household spending on non-durable goods slightly declined (-0.8%).
For 2005 stability in consumer spending in comparison with the previous year is forecast for the Veneto, with a growth of about 1% both in family expenditure and public administration expenditure.
Consideration of what a family in the Veneto spends a month (Note 3) shows a trend which contrasts with the general situation of weak consumption, leading us to believe that some negative elements of the trend reported in recent years did not substantially affect the social and economic performance of the Veneto.
In 2004, average monthly expenditure for a family in the Veneto was 2,716 euro, 335 euro more than the national average, ranking the region third after Lombardia and Emilia Romagna, 96 euro up from the previous year.
The greater wealth enjoyed by households in the Veneto allowed them to allocate a greater share of income to non-food products, indeed expenditure on foodstuffs decreased by 3%, to 440 euro, though it continues to take up a considerable part of the household budget, 16.2% of total spending, but it is well below the national average (19%).
As regards cities in the Veneto, in 2005 the growth rate of prices was highest (+1.8%) in Venice and Vicenza, with an annual increase in the price index of +0.1 per cent in Venice and +0.2 per cent in Vicenza. For all the other sample cities in the Veneto the price index was lower than the national average, decreasing in the last year by 0.3 per cent in Verona (from +1.9% in 2004 to +1.6% in 2005) and Padova (from +1.7% to +1.4%) and by 0.2 per cent in Belluno (from +1.6% to +1.4%).
There was a relative slowdown in world trade flow, which increased by about 7% in comparison to 10% in 2004. The origin was a partial reduction in the rate of world economic development, in particular that of emerging Asian countries and the United States. After a pause in the middle two quarters of 2005, world trade showed signs of recovery towards the end of the year. A marginally more sustained increase is expected in 2006.
The trade flow of emerging countries has grown at about double the rate of industrialised countries since the beginning of the third millennium, and today the share of world trade held by emerging countries has risen to 40%. The increase in world trade is still steady, mainly due to the positive performance of the Asiatic region, which is fuelled by the extraordinary development underway in China and India, both of which saw their exports and imports rise by an average of 15 – 20% in 2005.
In 2005, the Veneto was particularly affected by a weakening in the link between world demand and EU and Italian demand, although the region retained a consistent share of national exports (13.4%).
Veneto exports dropped by –1.5%, after an excellent 2004 (+6.5%) (Note 4) in contrast with an increase of 4% at national level. These figures should be analysed more carefully because each year the official provisional data released in spring are adjusted upward some months later (Note 5).
Its imports were worth 32.1 billion euro, an increase of +2.1%, which produced an active trade balance of 7.5 billion euro.
The EU is still the main channel of trade for Veneto products with a share of 56% of total exports, but there was an annual drop of 5.1%. The main increases were recorded in direct flows towards East Europe (+5.9%), the Middle East (+23.5%), North America (+1.5%), East Asia (+15%) and Central Asia (+12.5%).
The dynamics of the last two years highlights that the Veneto’s foreign trade is shifting towards the east. Exports towards China, Russia and Turkey, namely the countries driving world growth, have increased considerably. However, exports fell towards the Veneto’s traditional trading partners (Germany, the USA, France and the UK), a drop which has been partly offset by the growth within other markets such as Spain, Switzerland, Belgium and Croatia.
Italian exports are currently experiencing a period that is governed by two types of processes: the first type regards the production integration of the majority of European firms within the single market; the second regards the intensification of globalisation. Most affected are industrial processes that make labour intensive products, which face stiff competition in terms of cost and price, especially from emerging Asian countries.
These processes entail reallocation of production factors and in many cases some stages of the production process are delocalised. An additional problem is that of competitiveness, which often involves underlying issues such as innovation as well as the improvement of product quality and sales and after-sales services.
Frequently-used indicators are not always able to measure the dynamics of competitiveness accurately, especially at a time when processes and products are subject to rapid innovation and markets and structures are being overhauled. Export values often do not take into account a change in product quality; consequently an increase in value against the average value of a competitor may either mean an improvement in product quality with positive knock-on effects for competitiveness, or a drop in relative price, which will have negative effects.
And in this case the effort to increase entrepreneurial competitiveness is noteworthy: In recent years there has been an increase both in specialised companies producing high technology goods and, consequently, in the supply on foreign markets. In 2005 the Veneto had 9.6% of the national total of specialised companies producing high technology goods, second only to Lombardia (22.2%).
A further indication of the technological quality of goods can be obtained by looking at the export dynamics of the manufacturing sector and aggregating sectors according to the standard OECD classification (2003) (Note 6). Since the end of the nineties the share of Veneto exports of high technology goods has been increasing. The share grew from 6.3% in 1998 to 8.3% in 2005, thus revealing a progressive increase in exports of products with very high added value and which are less affected by the competition from new emerging countries Though still dominant, the share of low technology exports declined, dropping from 44.7% in 1998 to 39.2% in 2005. The share of medium technology exports in this same period of time had limited growth: the share of medium high technology goods rose from 32.8% in 1998 to 34.4% in 2005, while the share of medium low technology goods rose from 16.3% in 1998 to 18.1% in 2005.
These five years were decisive for the changes which have taken place in the economic world, above all for the rules and terms of trade, as well as for the shocks related to geopolitical tensions, the rise in petroleum prices, the exchange rate for the euro against the dollar, all factors which have led to moments of reflection and review of the models of development themselves.
The beginning of this twenty-first century is witness to the important role given to economic growth as an objective which links industrialized countries to developing countries despite their different circumstances: the former need growth to counter the financial consequences of their demographic contraction, while the latter pursue it in order to improve the living conditions of their four billion inhabitants. It is essential that the different pace and conditions of growth find a balance since with increasing globalisation of markets and investments, decisions taken by companies in one continent have an impact on those taken by other companies in other continents. Hence the need for a high degree of synchronization of choices made by a vast range of actors, choices which need to be filtered and directed.
The slowdown of the euro area the main countries to different degrees. In France GDP, driven by internal demand, remained slightly higher than in the rest of the area. On the contrary in Germany it was slowed down by the persevering weakness of expenditure, which almost cancelled the boost of foreign demand, also decreasing. In Spain, economic activity accelerated. In Italy the year ended with almost zero growth.
In the wake of petroleum price increases and as a consequence of the high demand from Asia, prices of other primary materials for industrial use increased significantly, , with peaks of nearly 40% in the ferrous metals sector. The natural gas crisis left its mark last winter: at the beginning of 2006, the energy scenario in Europe was complicated by difficulties in obtaining gas supplies due to the decreased supply from Russia (Note 7), caused both by political upheavals in the region and climate conditions. The demand for natural gas has increased significantly in recent years, as an alternative to crude oil, due to the higher cost of petroleum. Production for industrialized countries, however, is not going to increase, while developing countries will play a key role in its increase both in demand and supply. Few European countries are self-sufficient in terms of this energy source, and Italy imports most of its energy since it does not have the capacity to meet domestic consumption.
The increase in population is still partly due to the registration of non-nationals already present in Italy and regularised with the 2002 amnesty, provided for in laws 189/02 and 222/02, the effects of which continued in 2004. Consider that at the beginning of the year approximately 58,300 regularisation permits were issued in the Veneto on the basis of these laws, and these accounted for 9% of the permits issued in the whole of Italy. Futhermore, in 2004 there were about 288,000 non-national residents in Veneto, a 57% increase compared with 2002.
There is thus an inversion of trends which we believe may have a positive impact on the current imbalance – which characterises all modern western societies – between the young and old of the population, which has led to a re-dimensioning of the active population, with repercussions in the area of assistance also. The population leaving the labour market is 34% greater than the population of 15-19-year-olds, that is those potentially entering the labour market. Furthermore for every 100 young people under the age of 15 there are currently 137 people over 65 years of age.
The greater number of births corresponds to the increase in fertility level which was recorded in the last year: indeed, after a 30-year downward trend, which reached the lowest level in the history of the Veneto in 1994, just 1.06 children per woman, since the mid-nineties the fertility level has slowly started to rise and the gap between the Veneto and the rest of the country is beginning to close. According to the last estimates in 2004, for the first time in years the fertility of our region, 1.37 children per woman, is above the Italian average (1.34); indeed the Veneto has become one of the most prolific regions in Italy, on the same level as Lombardia, beaten only by Trentino Alto Adige (1.54 children per woman), Campania (1.48) and Sicilia (1.43).
On the other hand, the recovery of the birth rate in recent years on a national level is largely due to the increased fertility of the Central-Northern regions, in contrast with a reduction in the South, traditionally the part of the country with the highest number of children per woman.
- The average growth of the GDP in Italy in 2005 was +0.1%, therefore lower than that of the European Monetary Union, slowing down compared with 2004. This trend applied to all components of demand except for public expenditure (+1.2) which managed to partly compensate for the contraction in investment (-0.4%). A substantial halt to household expenditure is recorded (+0.1%).
- This phase went at the same pace as the revision of data of national accounts following the application of a different calclulation method.
- Information from the Istat annual survey of household expenditure.
- Following the coming into force of regulation (EC) No. 638/2004 and Commission Regulation (EC) No. 1982/2004, percentage variations 2004/03 were elaborated using the new calculation method for intra-community exchanges.
- The 2005 figure for commercial exchange is provisional and in recent years this figure has been underestimated, particularly in the case of Veneto exports. In the last three years, from 2002 to 2004, the difference between the provisional figure and the definitive figure for Veneto exports has been, on average, about 3.5% (approximately 8.5% for the province of Vicenza) compared with the national figure of 1.7%.
- Based on the median figures of the distribution of spending on R&D in relation to the value added in each sector of classification of the 12 member states in 1999, which subdivides the products of the manufacturing sector into four categories (high technology, medium high technology, medium low technology, low technology).
- Through the public company GazProm, Russia currently supplies 31% of the natural gas required by Italy, as well as high shares for other countries, and is undoubtedly the leading supplier for European countries. The change in geo-political balance following independentist urges from certain ex-soviet states have had an effect on the supply of this resource, since GazProm’s gasducts cross some of these republics before reaching Europe. In addition to political tensions there have been climatic events which have required a reduction of the intensity of supplies from GazProm to some European countries in order to meet the greater demand from Russia’s population and national industries.
- The last year for which data is available on a national level.
- Data from the 'Ufficio Internazionale Cambi” (International Change Office) – sample survey on “International Tourism in Italy”.