The report

Sicilian industrial clusters at risk with decarbonisation

This is what Banca d'Italia says in its report on the island's economy in 2023: growth still weak, agriculture and industry hurt

by Nino Amadore

28 June 2024

5' min read

Key points

Economy grows at a very moderate pace
Male industry and agriculture
Weak credit market
Tourism: attendance up 11.4%
The Region's estimates in Defr 2025-2027

5' min read

The concentration of activity in a single sector or excessive dependence on a small number of large operators are potential risks for Sicily's industrial clusters. Moreover, the overall activity of the island's industrial clusters could be affected by the reconversion processes associated with the energy transition and the progressive decarbonisation of our economies. These are two passages of a focus on Sicily's industrial clusters from the Bank of Italy's report on the island's economy presented in Palermo. According to Bankitalia's researchers, the positive and significant correlation, especially in the oil poles, between the quantity of crude oil processed and the turnover of other manufacturing companies based in the same area could be affected. And this is just one aspect of the Sicilian industrial system that, the Bank of Italy report goes on to say, counts (the data are from 2021) around 4,200 local units belonging to multinational groups that 'represent a marginal share of active establishments (1.4%) but employ almost 9% of the workforce and generate more than a fifth of the added value of the non-agricultural and non-financial private sector'. Added value that between 2017 and 2021 in Sicily remained substantially stable compared to a slight increase in the rest of the country.

Economy grows at a very moderate pace

The focus on industrial clusters is part of the overall examination of the Sicilian economy, the condition of which, according to the Bank of Italy, is less brilliant than has been reported. In 2023, economic activity in Sicily grew at a very low rate and lower than in the previous year: the product increased by 0.7%, slightly less than the Italian GDP. "The signs of recovery that had appeared in the first quarter faded in the months that followed," the report reads, "Based on the qualitative indications gathered, economic growth would be modest even in the current year.

Male industry and agriculture

Things are not going well for agriculture due to the weather situation: the added value, which had fallen by 3.7% in 2022, fell further in 2023, albeit less sharply than the national and Mezzogiorno averages. Industry is not doing well due to a weak economy and the high cost of credit, which have held back business investment: "In 2023, the contraction in industrial added value continued, with a reduction substantially similar to that recorded in the Mezzogiorno and nationally. Based on our elaborations on Istat data, the decline in regional industrial production, more marked in the first half of the year, eased in the last quarter of 2023," write the Bankitalia researchers.

With regard to construction, although 'decelerating, activity remained at high levels, still benefiting from the stimulus provided by tax incentives as well as demand from the public sector. The weakening of consumption was reflected in the performance of private non-financial services, the dynamics of which, however, were supported by the positive results of tourism and air and maritime transport,' it continues.

Weak credit market

The weak credit market is beginning to show worrying signs: the growth of loans to the non-financial private sector in 2023 has gradually weakened to a standstill. "Credit risk indicators, which had reached very low values in 2022, showed some signs of worsening," it reads. "For households, the flow of new impaired loans has increased; for the productive sector, the incidence, among performing loans, of those with delayed repayments has increased.

Tourism: presences grow by 11.4%

Positive news comes on the tourism front. In 2023, the sector recorded an increase in admissions of 11.4%, a figure more than double that of the corresponding Italian figure. As in the national average, the growth in admissions in Sicily mainly involved the foreign component, whose overnight stays exceeded pre-pandemic values; spending by international tourists grew by about 20 per cent. The increase in admissions affected both hotels and non-hotel establishments and was particularly intense in the provinces of Agrigento and Trapani. And the boom in admissions is reflected in passenger traffic at the island's airports, which grew overall by 10.7 per cent (by 20.6 per cent for international flights), a figure slightly above the Mezzogiorno but below the national average.

The Region's estimates in Defr 2025-2027

The Region's reading is different. The Defr 2025-2027 approved by the junta led by Renato Schifani confirms Sicily's GDP growth trend for the next three years as well, albeit at a mitigated pace due to the difficulties of the international economic and political framework, but still in line with the country's figure. According to the Document's estimates, Sicily's GDP is expected to grow from 0.7 per cent in 2024 to 1.1 per cent in 2025, 0.9 per cent in 2026, and 0.8 per cent in 2027. All the main economic indicators are expected to improve, thanks to the conspicuous investments planned with regional, national, and European funds and to the Sicilian government's policies to support businesses and accelerate spending.

"The Defr," said the President of the Region, "starts from a very comforting datum certified in recent days by Svimez, according to which Sicily is the region with the highest growth in 2023 with a GDP increase of 2.2 per cent. My government intends to continue the action of developing the economic environment through an optimal use of all available resources. In addition to enabling us to commit European resources, those of the NRP and the Development and Cohesion Funds, the strengthening of infrastructure lays the foundations for the further growth of our territory. We will support the agricultural sector, which is currently in great difficulty, but which represents a fundamental part of our economy, just as we will continue to work alongside businesses by speeding up expenditure and payments. We will also continue the action to consolidate the accounts of the Region. We have already reduced the deficit thanks to the increase in tax revenues, figures that are the direct consequence of the economic recovery and the impressive injections of liquidity that we have made into the island's productive world. We are on the right track to definitively reverse course and finally aim at the development of our Sicily'.

Among the objectives contained in the document, there is also the organisational reorganisation of the regional administration through recruitment plans to cover staff shortages and specific skills. A process already underway thanks to the revision of the rules on turnover contained in the agreement with the State signed by the Schifani government on 16 October 2023. The expected result is the strengthening of administrative capacity, combining generational turnover with the enhancement of internal resources, together with the implementation of processes to simplify procedures.