Lombardy's production structure with a high industrial weight (the incidence of the industrial sector on the VA is approximately 24,5% for the region vs. 18,4% nationally) makes it highly exposed to cyclical fluctuations of the economy; but the region, despite the difficulties, still remains among the most virtuous realities in the country. According to Prometeia data, between 2008 and 2014, with a contraction of the GDP of -4,2% (vs -7,5% in Italy), the region had a good performance in Italy, albeit negative, second only after the Trentino Alto Adige (-3% y/y).
This is what emerges from the reading of the economic data carried out by the Research & IR Area of Banca Monte dei Paschi di Siena, which analyzed the peculiarities of the territory and the economic dimension of the Lombardy Region. In 2013, against a drop in Italian production of -3,2% y/y, Lombardy recorded a more contained annual contraction (-0,3% y/y); while the turnover of the regional industry grew (+0,9% y/y). The data for the third quarter of 2014 once again show a growth in production in Lombardy (+1,6% y/y), despite the drop in Italian IP, and the Lombard turnover recorded a new positive sign, in the wake of the trend foreign orders.
In fact, foreign demand provided valid support to the Lombardy economy during the crisis, with the share of exports on the Added Value (including foreign sales of precious metals) remaining stable (at 35,3% from 35,7% % of 2007). In 2013, Lombardy was confirmed as the first Italian region for the value of exported goods, with a 27,7% share of national foreign sales. Unfortunately, in the first 9 months of 2014, exports from Lombardy remained almost unchanged (+0,3% y/y) compared to the growth of the national figure (+1,4% y/y). The sectors that had a strong momentum were food, clothing and wood, paper and printing. On the other hand, the sectors of base metals and metal products, means of transport, computers and pharmaceuticals were down. The labor market is still in difficulty, even if the authorized hours of layoffs in Lombardy decreased by -7,1% m/m. In the first 11 months of 2014, the total hours authorized for layoffs saw a very slight decrease of -1% y/y, while we recorded strong growth for extraordinary hours (28,9% y/y).
In 2013 residential sales in the region suffered a further decline, however, lower than that recorded in Italy (-8,8% vs -10,8%) and in particular in the capitals of Lecco and Cremona we had the best situation, with the volume of residential property sales down by 0,4% y/y and 0,2% y/y, respectively. After years of contractions that began in 2007, however, an increase in sales was recorded in the first half of 2014 (+0,6% y/y compared to the same period in 2013), a sign of a timid attenuation of the crisis in the sector. Trading recovered in the province of Cremona (+3,5% y/y), Brescia (+3% y/y) and Milan (+2,5% y/y). Strong decreases in Bergamo (-5% y/y) and Mantua (-4,1% y/y). The slightly positive trend in sales, which seem ready for growth in the second half of 2014, is followed by a further contraction in real estate prices, which recorded a cumulative reduction of 10,6% between 2009 and 2013.
Credit to Lombard businesses continues to contract, showing a less favorable trend than in the national context. In the third quarter of 2014, loans to Lombard companies fell by -5,5% y/y versus -4,6% y/y of the national figure. With regard to credit quality, non-performing loans to ordinary customers in Lombardy, although still high (13,33% in September 2014) remain lower than the national figure. Loans beyond the short term to consumer households for the purchase of homes, after the marked declines that occurred in 2012, show more contained declines in 2013 and in the first half of 2014 than the national average. The study carried out by the Research & IR Area of Banca Monte dei Paschi di Siena underlines that from the analysis of the historical series on growth, recorded in real terms, at regional and national level, an interesting correlation emerges between the trend of the Lombard GDP and the Italian one, especially after the outbreak of the financial crisis.
According to our estimates, in 2014 Lombardy's GDP will grow by 0,4% y/y, registering a figure in contrast with the national figure (-0,4% y/y). While 2015 looks set to be the real turning point also at the regional level, with more vigorous growth (+1% y/y) compared to the Italian figure which will stop at +0,4% y/y.
