How the coronavirus outbreak is affecting Italy’s economy

As Italian authorities battle to contain the new coronavirus, measures to stem the spread of infections in the industrial north are impairing the eurozone's third-largest economy.

How the coronavirus outbreak is affecting Italy's economy
The Gallery Vittorio Emanuele II shopping arcade in Milan. Photo: Andreas Solaro/AFP

The Italian economy was already sluggish before drastic isolation measures took effect, and it must now contend with plunging stock prices in Milan, cancelled trade shows and threats to tourism.

The weekend saw a surge in new cases, with 219 identified by Monday.

Authorities have reacted in the two worst-affected regions, Veneto and Lombardy, by closing schools and museums and scrapping sporting and cultural events.

MAP: Which parts of Italy are most affected by coronavirus outbreak?

The epidemic and measures to contain it “are having a very big impact on the service sector,” says Luca Paolozzi of the REF research institute, giving the example of restaurants and bars in the Lombardy region being shut from 6:00 pm to 6:00 am, when they do the most business.

“Since the service sector was allowing the Italian economy to keep its head above water, it is quite probable that we will see GDP shrink in the first quarter of 2020, but also the second,” he says.

Hobbled by a slowdown in the global economy and internal political instability, in 2019 Italy registered the EU's lowest growth rate at a mere 0.2 percent. The government had been forecasting growth of 0.6 percent in 2020, but that could now be in danger.

“Veneto and Lombardy alone represent between 25 and 30 percent of Italian GDP and are a motor of productive activity,” says Paolozzi.

READ ALSO: 'A strange, absurd situation': Life in Italy's coronavirus 'red zone'

Photo: Miguel Medina/AFP

The Milan stock market suffered heavy losses on Monday and was down by almost six percent in afternoon trades. Luxury brands like Salvatore Ferragamo (down 9.3 percent) and industrial groups such as CNH and Brembo were among those worst hit.

Milan Fashion Week, which ended on Sunday, saw a 50-percent drop in Asian buyers and safety measures led to two shows — including Giorgio Armani's — taking place without an audience.

Several big trade fairs have been cancelled or postponed, including the Mido eyewear show. Fears are now growing that the same fate could befall the Milan Furniture Fair, scheduled for April 21-26.

The event industry association Federcongressi&eventi has “raised the alarm”, saying that businesses in the sector in the Lombardy, Veneto and Emilia-Romagna regions stand stand to lose more than €1.5 billion ($1.6 billion) in the space of a month.

READ ALSO: Should I cancel my trip to Italy because of the coronavirus?

Photo: Miguel Medina/AFP

The hospitality industry is concerned as well.

“The situation is worrying. Apart from the cancelling of events, businesses are starting to cancel bookings and delay trips,” Maurizio Naro, the Milan head of the Federalberghi trade body, told AFP.

“For this week, there is an initial estimate of a cancellation rate of 25 percent,” he said.

Milan has seen a rise in tourist numbers since it hosted Expo 2015 five years ago, with visitors drawn by its Duomo basilica, vibrant nightlife and fashion and design events. The number of visitors rose from 4.2 million in 2011 to 6.8 million in 2018.

But with bars and restaurants shut from 6:00 pm and museums and cathedral closed, tourists have much less to do.

The Duomo in Milan was closed to visitors on Monday. Photo: Andreas Solaro/AFP

Belgian Sophia Lomonaco was philosophical after arriving at Milan airport. “We'll make do, we will see what we're able to do anyway, that's life,” she said. She was on a four-day break with daughter Maeva to celebrate her 18th birthday.

“What's most annoying is the museums, we'd reserved for the Duomo,” Lomonaco said.

They were mulling a trip to the nearby Borromean Islands instead.

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WHO expects more monkeypox-related deaths in Europe

The World Health Organization's European office said Saturday that more monkeypox-related deaths can be expected, following reports of the first fatalities outside Africa, while stressing that severe complications were still be rare.

WHO expects more monkeypox-related deaths in Europe

“With the continued spread of monkeypox in Europe, we will expect to see more deaths,” Catherine Smallwood, Senior Emergency Officer at WHO Europe, said in a statement.

Smallwood emphasised that the goal needs to be “interrupting transmission quickly in Europe and stopping this outbreak”.

However, Smallwood stressed that in most cases the disease heals itself without the need for treatment.

“The notification of deaths due to monkeypox does not change our assessment of the outbreak in Europe. We know that although self-limiting in most cases, monkeypox can cause severe complications,” Smallwood noted.

The Spanish health ministry recorded a second monkeypox-related death on Saturday, a day after Spain and Brazil reported their first fatalities.

The announcements marked what are thought to be the first deaths linked to the current outbreak outside Africa.

Spanish authorities would not give the specific cause of death for the fatalities pending the outcome of an autopsy, while Brazilian authorities underlined that the man who died had “other serious conditions”.

“The usual reasons patients might require hospital care include help in managing pain, secondary infections, and in a small number of cases the need to manage life-threatening complications such as encephalitis,” Smallwood explained.

According to the WHO, more than 18,000 cases have been detected throughout the world outside of Africa since the beginning of May, with the majority of them in Europe.

The WHO last week declared the monkeypox outbreak a global health emergency.

As cases surge globally, the WHO on Wednesday called on the group currently most affected by the virus — men who have sex with men — to limit their sexual partners.

Early signs of the disease include a high fever, swollen lymph glands and a chickenpox-like rash.

The disease usually heals by itself after two to three weeks, sometimes taking a month.

A smallpox vaccine from Danish drug maker Bavarian Nordic, marketed under the name Jynneos in the United States and Imvanex in Europe, has also been found to protect against monkeypox.