The South grew more after the pandemic, but the population decline weighed heavily

The economy of southern Italy has reacted better than the rest of Italy to the end of the Covid-19 pandemic. There has been superior growth thanks also to expansive public measures and the resources of the Pnrr but on the horizon, like and more than the other areas of the country, it will see a brake due to the negative demographic trend. According to the Bank of Italy in its report on regional economies, published on Wednesday 6 November, the subject of demographics appears decisive for a Mezzogiorno that is seeing negative growth and emigration to the northern regions and abroad, especially of citizens with higher educational qualifications. On this point, the data speak for themselves: the median scenario of ISTAT's demographic forecasts predicts a sharp deterioration in the contribution of the demographic dividend to economic growth.

Between 2023 and 2043 in Italy the resident population would contract by 4.3 per cent, reflecting a slight growth in the North (0.9 per cent), more than offset by a large drop in the Centre and, in particular, in the South (by 3.6 and 11.9 per cent, respectively). The fall will be even more marked for the population of working age: the number of people aged between 15 and 64 will fall by more than 16 per cent on average, with different trends among the various macro-areas: -11% in the North, -16 in the Centre and -24 in the South.

Regional economies experienced a decline in GDP in the first six months of the year. As the autumn draws to a close, the report says, Palazzo Koch's estimates indicate that Italian industrial production fell in the first nine months of 2024, reflecting the weakness of domestic and foreign demand. The latter, in particular, sees a decreased potential demand in all macro-areas, especially in the North-East and Centre. Services fared better: the share of companies with expanding sales in the first three quarters of 2024 was high in all the divisions (around 50 per cent in the North Central and 43 per cent in the South) and much higher than the incidence of those with declining sales (20 per cent in the North West, around 16 elsewhere).

As of August 2024, only 15 per cent of the Pnrr tenders awarded (see also Il Sole 24 Ore of 5 November) have been completed, while the remaining 32 per cent are still in progress, often with large delays compared to the estimated timeframe. "Work progress is slightly lower in the South of Italy," reads the report, where it is estimated that 47 per cent of the tenders announced since November 2021 and already awarded have started or completed work. The incidence of these tenders is higher in the North East and North West (50 per cent) and lower in the Centre and the South (45 per cent). The report recalls that as of July 2024, the value of projects financed with NRP resources managed by public implementers amounted to EUR 113 billion. Approximately 80 per cent of these projects (91 billion) concern interventions for which a call for tenders is required. The calls for tenders published between January 2020 and August 2024 and linked to projects financed by the NRP amounted to more than 173,000, with a value of approximately EUR 61bn.

Moreover, wages in the southern regions remain 30% lower than those in the Centre-North, which, moreover, in 2023 benefited from the contractual renewals of the sectors that carry the most weight in those regions. According to Bankitalia, 'the increase in employment has supported the expansion of households' disposable income, especially in the southern regions; inflation, however, has eroded their purchasing power, curbing the growth of consumption'.