Italian economy suffering multiple blows as Wuhan coronavirus outbreak grows
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Topics: ITALIAN ECONOMY WUHAN CORONAVIRUS
Analysts said it could be just the start of a trend.
Italy's economy has been hit hard by the outbreak of Wuhan coronavirus. Factories and offices are closed, including many that produce high end luxury goods that have been one of the country's most reliable economic categories.
Officials worry luxury companies in other countries may gain market share that will be difficult for the Italian companies to get back.
In addition to that, tourist arrivals have dramatically dropped since news of the outbreak began to spread five weeks ago.
The domestic market has also softened, with Italians staying home and spending less due to worries of the virus. Restaurants, cinemas, bars, and other places where groups of people might meet are closing their doors or limiting access.
A government decree that allows mortgage holders to delay payments until the crisis ends will help some companies but will also hurt lenders.
"The economic problems from coronavirus in Italy are more severe because the economy was already weak before all this started," Giovanni Battista Ponzetto, co-founder of the Tokos Financial Consulting Firm, told Xinhua. "It is also significant that the virus outbreak is strongest where the economy is most vibrant."
Ponzetto cited some economic estimates that predict the Italian economy could shrink by 1.4 to 1.6 percent this year, down from estimates of at least 0.4-percent growth for the year as a whole before the outbreak started.
"That would be a big fall but I think the contraction could end up being even more significant," Ponzetto said.
Alessandro Polli, a professor of economic statistics at Rome's La Sapienza University, agreed, saying problems related to the outbreak are eroding some of the long-time pillars of the country's economy.
"We cannot guess how big the economic impacts will be until we know how long this outbreak will last and how far it will spread," Polli said in an interview. "But we are already seeing significant damage to the economy."
Polli pointed to the plight of small and medium sized enterprises that are the backbone of the Italian economy.
There are around 6.2 million companies in Italy compared to 4.5 million in France, according to the data firm Statistica, even though the French economy, based on International Monetary Fund estimates for last year, is more than a third larger than its Italian counterpart.
"There are many advantages to having an economy that is built on successful, innovative, small and medium-sized companies," Polli said. "But when there is a protracted crisis, these companies will suffer more than larger companies."
"If this coronavirus crisis lasts another two or three months or more, I worry that a larger number of these smaller companies will be crippled or they will fail," Polli added. ■