The annual report “The economy of Calabria” is presented today in Catanzaro.
Macroeconomic trends
In 2023 the Calabrian economy slowed down, after the two years of sustained recovery that followed the pandemic crisis. Based on the Bank of Italy’s ITER indicator, economic activity in Calabria grew by 0.6 percent in the year (3.2 in 2022), a figure similar to the South and lower than the Italian average. The macroeconomic framework was particularly affected by the loss of purchasing power of families and the tightening of credit access conditions. Overall, the trend in consumption was less favorable than that of investments.
Looking ahead, the economic situation could benefit from the strong slowdown in inflation recorded at the end of 2023 in the region, as well as in the rest of the country, especially in relation to the drop in the prices of energy goods. However, possible downward risks for growth could derive from the further worsening of geopolitical tensions, which weigh on the uncertainty and climate of confidence of economic operators.
Businesses
In 2023, companies’ turnover growth at constant prices slowed. The modest dynamics of the tertiary sector, which represents the main sector of the regional economy, contributed above all to this. The trend remained better in construction, where the increase in activity in the public works sector partly offset the slowdown in private residential construction. Production, however, fell in industry in the strict sense, essentially for smaller companies, and in the agricultural sector, suffering the effects of the adverse climatic phenomena recorded during the year. Despite the worsening of financing conditions, investments increased, also benefiting from various public support measures; in particular, those aimed at improving energy efficiency or increasing the use and production of photovoltaic energy have continued to grow significantly, which have favored the new acceleration of production capacity from renewable sources which has occurred in the region in the last two years.
Despite the increase in financial charges, company profitability remains high in historical comparison, still reflecting the increase in sales prices and the modest dynamics of labor costs. Company liquidity remains at the consistent levels achieved during the two-year period 2020-21. This has contributed to the maintenance of low company mortality rates, which has also contributed to the overall strengthening of the economic and financial situation of Calabrian companies, which has been underway for about a decade. The performance of the regional economy, however, remains conditioned by the limited share of new high-growth companies, especially those operating in sectors with greater technology and knowledge intensity. Furthermore, Calabria is characterized by a low presence of multinational companies, which by operating on a global scale could significantly contribute to economic growth, job creation and the transfer of technological skills.
The labor market and families
Employment in the region also increased in 2023, both in the self-employed and employed components, again fueled by widespread use of permanent contracts. The labor market participation rate has risen to 2019 levels, partially counteracting the negative effect linked to the demographic decline, which has expanded over the last decade. In particular, the dynamics of the working age population is affected both by the worsening of natural balances and the aging of the population, and above all by emigration. Despite the increase in people looking for work, the difficulty in finding manpower reported by companies has continued to grow, mainly involving technical or highly specialized figures.
The nominal income of Calabrian families benefited from improvements in employment levels, but the increase recorded in 2023 was more than offset by inflation, which slowed down the recovery in consumption underway after the pandemic. Families continued to make widespread use of bank credit to support consumption spending; they have instead reduced their demand for mortgages linked to the purchase of homes, which compared to the past was financed to a greater extent with their own resources, also being able to benefit from the accumulation of savings achieved during the pandemic.
The credit market
In 2023, the expansion of bank credit came to a halt, mainly reflecting the reduction in loan demand linked to the worsening of financing conditions. This dynamic derives both from the slowdown in loans to families and from the decline observed for the productive sector, which affected smaller companies, also reflecting the acceleration of repayments of guaranteed loans granted during the pandemic. The rate of credit deterioration rose slightly, however still remaining at low levels. Bank deposits of families and businesses remained essentially unchanged overall; the market value of securities held in the banking system has grown significantly, above all due to the inflow of resources towards new issues of debt instruments, especially government bonds, linked to the search for higher returns in a context of high inflation.
Decentralized public finance
In 2023, spending by local authorities increased significantly. Within the current part, the adjustment of utilities and fees and transfers to families and businesses to deal with the increase in energy costs continued to have an impact, in addition to the greater use of fixed-term staff and temporary positions. external issues linked to the strengthening of administrative capacity for the implementation of PNRR projects. In the healthcare sector, the staff situation remains more fragile, following the modest turnover recorded in recent years, which in the future will still be affected by the retirement of a significant number of professional figures.
Capital expenditure has further accelerated, reflecting the closure of the 2014-20 community programs and the intensification of the implementation interventions of the PNRR, concerning both the acquisition of intangible assets to be allocated to the digitalisation process of public administration and above all the creation of infrastructure. However, among the most delayed areas of public intervention is the fight against hydrogeological instability, which could potentially find support from its inclusion among the objectives of the 2021-27 community programs, which are slowly getting underway.
Revenues from local authorities continued to grow significantly, driven by state transfers; tax revenues, however, remain conditioned both by the reduced fiscal capacity of Calabrian taxpayers and by the slow collection speed by the entities. The budget situation has improved but is still worse than the rest of the country, especially for the provinces and larger municipalities.
