The post-financial-crisis recession is hitting the south of Italy harder than the more wealthy north of the country, weighing on its GDP, exports and employment rate, according to the Bank of Italy's report on the economic conditions of Italian regions between 2007 and 2013.
During the six years following the financial crisis, the economic gap between the north and the south -- already very large -- grew due to several factors.
The vice-president of the Bank, Luigi Federico Signorini, said that the difference might be chalked up to “dearth of infrastructure, misuse of public resources, inefficient judicial system and growing informal economy.”
Italy’s largely agricultural south was already underdeveloped when Italy became a nation in 1861. Billions of euros in state investment and tax transfers have done little to change that, and now the recession seems to be undoing some of the progress that was made.
In the 2008-2009 period, according to the report, the dramatic fall in exports affected mainly the northwest and northeast of Italy. In 2010-2011, while the exports in those areas were growing, in southern Italy GDP was steadily decreasing. The following biennium, characterized by a dwindling domestic demand, witnessed a reduction of GDP that was more marked in the south. In 2013, southern Italy's GDP was down 13.5% from 2007 (in the north, the figure was -7.1%).
Likewise, labour market was more penalized in the south. In the 2007-2013 period , unemployment grew more in southern Italy : 9.5% vis-à-vis the North's 1.1.%. According to the Bank of Italy, today the gap between the south and the north for the employment rate is 21%.
As a result, perhaps not surprisingly, since 2012, more and more people have moved from the south to central and northern Italy, and the rate of well-educated people leaving southern regions has grown. In 2012-2013, about 1.6 million Italians changed their residence: most of them hailed from the south.
The reduction in industry’s value-added was milder in northern Italy than in central and southern Italy. In the south, the reduction was 29.9%, while it was 20.4% in the center, 16.6% in the northeast and 15.8% in the northwest. In the services sector alone, the value added was whittled down by 7.9% in southern Italy, as opposed to 4% in the center, 3.5% in northeastern Italy and 0.6% in the northwest.
Households in southern Italy were affected more severely by the crisis. Between 2007 and 2013, the reduction of household spending in consumption was higher than household income; in the rest of the country, this happened just from 2012.
However, the south continues to have lower debt burdens and less-indebted households. The degree of financial vulnerability of these household is nonetheless higher than central and northern ones.
As for business and access to credit, the Bank of Italy underlines how southern firms still have more difficulties in obtaining credit than northern companies. Southern companies also depend more heavily on bank lending. During the crisis, the increase of businesses being in a situation of credit rationing was similar everywhere in the country, but there was a bigger gap between the north and the south as for the size of the financing.
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