The slow pace of Central Italy in the midst of legacies from the crisis and current difficulties

According to recently published Istat data [1], the economy of the Centre (which includes Tuscany, Umbria, Marche and Lazio) increased by 0.9% in 2017, just half the performance of the North and less than the South (1.4%) as well.

This is not the first time the Centre has grown less than the other areas, it has happened episodically in the last 20 years. However, from 2015 to 2017 the Centre economy was always the least dynamic among the 4 Italian macro-areas (North-West, North-East, Centre and South). Let us discover why. 

The industrial activity is still affected by the consequences of the Great Recession, at least in certain regions. In Umbria, for example, the industrial gross value added has lost more than 30% with respect to the volume of 10 years ago (-12% is the national average). Furthermore, Tuscany, although moving on a recovering path, exhibits the greatest difficulties in the industrial crisis zones along the northern coast. As in the rest of the country, construction struggles to improve, but the Marche region has been heavily hit, since its value added halved in 10 years. In the services sector the results are somewhat mixed.

On the one hand, pre-crisis volumes have been recouped, on the other in the last 3 years Central Italy has shown a weaker performance in trade, transport and tourism, while it has followed the national average in the other services. Turning to demand components, in 2015-2017 consumption kept growing, export increased below the Italian average (yet in line with the North-West area) and investments expanded less than in the other areas. 

Export growth sets the Centre on a recovering phase. At the same time, its relatively low intensity points to the difficulties enterprises (especially small ones) face in competing on international markets. Hence, investments could have been boosted further by the external demand and it is not surprising they increased more in the more industrialised and internationalised North of the country. If anything, it is surprising that even the South displayed a better performance. Nonetheless, a more dynamic South in terms of investments is nothing but good news for the country, since it goes toward the direction of closing the gaps (first of all in infrastructure) with the rest of Italy.

Therefore, we recognise lights and shades in the Centre Italy picture, which is not too alarming overall. As a matter of fact the abovementioned difficulties seem either rather limited or linked to factors of a temporary nature (e.g. the impact of the earthquake may have had on tourism in Marche and Umbria and, in general, on small enterprises more dependent on local demand [2]). The economy of the area will continue its path of recovery in the coming years, without showing the vitality of the North, but proceeding along a growth rate similar to that of the South or slightly stronger.