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ECONOMY

Italy faces worst recession since WWII due to coronavirus

Facing its deepest recession since World War II and with business confidence collapsing, the coronavirus pandemic is hitting Italy's economy hard.

Italy faces worst recession since WWII due to coronavirus
A woman walks past a closed men's clothing shop in Rome on May 21, 2020. Placards read "Without government aid we cannot reopen on May 18, thousands of employees at risk." VINCENZO PINTO / AFP

Business confidence in the eurozone's third largest economy in May plummeted to its lowest level since official statistics institute ISTAT started the index in March 2005.

The figure is “alarming”, said small business federation Confesercenti.

“The health and economic emergency has swept businesses away, especially in shops, services and tourism,” it said.

Its members are particularly concerned “by the lack of liquidity necessary to pay costs and salaries… we are close to a point of no return and that's why the measures decided by the government (loan guarantees, SME subsidies) must be operational immediately,” said federation head Patrizia De Luise.

“We need to reduce bureaucracy and accelerate and simplify procedures, because if support is delayed again, many businesses will have no option but to stop,” she said.

Storekeepers asking for the reopening of shops and commercial activities gather for a flashmob protest outside the Santa Lucia railway station by the Grand Canal in Venice, May 03, 2020.  MARCO SABADIN / AFP

The government last week accused banks of not acting quickly enough, but they said that they had already passed on around 400,000 loan requests worth more than 18 billion euros ($20 billion) to the state-backed Central Guarantee Fund.

A million jobs threatened

Italy was the first European country to be hit by the pandemic and imposed a strict two-month lockdown which paralysed much of the country's economic activity.

As a result, the country is set for a drop in GDP of between nine and 13 percent, the Bank of Italy said on Friday.

Data also showed that the economy shrank 5.3 percent in the first quarter — worse than the 4.7 percent initially estimated. It had not seen such an “exceptional” decline in the first quarter since 1995, ISTAT said.

This year's losses could amount to 170 billion euros, equivalent to the GDP of Veneto, Italy's third biggest industrial region, a Mediobanca study said.

The head of the country's main business confederation Cofindustria, Carlo Bonomi, said that up to a million jobs could be threatened nationwide.

“We're waiting for figures at the end of May but indications are that between 700,000 and a million jobs are in danger,” he said.

“Jobs are only created if there is growth, innovation, investment. The car manufacturing crisis can't be solved with subsidies or furloughing. You solve it by looking to the future, by investing in new technologies,” he said.

Italy is set to be the main beneficiary of a European Union 750-billion-euro recovery plan but it still may not be enough.

A hairdresser takes part in a flashmob protest of storekeepers asking for the reopening of shops and commercial activities, on the Rialto Bridge overlooking the Grand Canal in Venice on 03 May 2020.  MARCO SABADIN / AFP

No aid

Italian citizens are slightly more optimistic, but far from celebrating. The pandemic has killed over 30,000 people.

Consumer confidence went from 100.1 points in May to 94.3 in March, its lowest level since December 2013.

While the state has paid for furloughs or handouts for those no longer able to work, many have slipped through the net.

They include Eleonora Fogliacco, 35, a fitness and swimming teacher in Lombardy, the hardest hit region where gyms were ordered closed at the end of February.

“I didn't qualify for the 600-euro monthly government handout because I earned more than 10,000 euros last year,” she told AFP.

“During the crisis I had peaceful days and days when I felt completely lost, without any state help. I could no longer see the future and I didn't know what to hold onto,” she said. “I don't buy anything. I depend on my partner for the shopping,” said Fogliacco.

“This situation has changed everybody's way of life (and) everything will be very complicated” in the future, she added.

According to a Confcommercio-Censis poll published on Tuesday, 53 percent of Italian families see their future negatively and 68 percent see the country's future negatively.

Because of lockdown, 42 percent of families have had to reduce their work and income, 26 percent have stopped work and 24 percent have been furloughed.

Six out of 10 families fear losing a job, as a result of which 28 percent have decided to take no holidays nor long weekends.

 

 

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COVID-19

Covid-19: Are Italian live events at risk of being postponed?

As the infection rate rises sharply across the country, Italian virologists are calling for concerts and festivals to be rescheduled.

Covid-19: Are Italian live events at risk of being postponed?

Italy has seen a large increase in the number of Covid-19 cases in recent days, so much so that a number of virologists across the country are now urging the government to postpone major live events in a bid to curb infections. 

According to a new report by Italy’s independent health watchdog, the Gimbe Foundation, 595,349 new cases were recorded in the week from June 29th to July 5th; a worrying 55 percent increase on the previous week. 

In the same time span, the country also registered a 32.8 percent rise in the number of hospitalised patients, which went from 6,035 to 8,003.  

The latest Covid wave, which is being driven by the highly contagious Omicron 5 variant, is a “real cause for concern”, especially in terms of a “potential patient overload”, said Nino Cartabellotta, president of the Gimbe Foundation. 

As Italian cities prepare to host a packed calendar of concerts and festivals this summer, health experts are questioning whether such events should actually take place given the high risk of transmission associated with mass gatherings.

READ ALSO: What tourists in Italy need to know if they get Covid-19

“Rescheduling these types of events would be the best thing to do right now,” said Massimo Ciccozzi, Director of Epidemiology at Campus Bio-Medico University of Rome. 

The summer wave is expected to peak in mid-July but, Ciccozzi warns, the upcoming live events might “delay [the peak] until the end of July or even beyond” and extend the infection curve.

Antonello Maruotti, Professor of Statistics at LUMSA University of Rome, recently shared Ciccozzi’s concerns, saying that live events as big as Maneskin’s scheduled Rome concert are “definitely not a good idea”. 

The Italian rock band are slated to perform at the Circus Maximus on Saturday, July 9th but the expected turnout – over 70,000 fans are set to attend the event – has raised objections from an array of Italian doctors, with some warning that the concert might cause as many as 20,000 new cases.

If it were to materialise, the prospected scenario would significantly aggravate Lazio’s present medical predicament as there are currently over 186,000 Covid cases in the region (nearly 800 patients are receiving treatment in local hospitals). 

Italian rock band Maneskin performing in Turin

Italian rock band Maneskin are expected to perform at the Circus Maximus in Rome on Saturday, July 9th. Photo by Marco BERTORELLO / AFP

But, despite pleas to postpone the event, it is likely that Maneskin’s concert will take place as scheduled.

Alessandro Onorato, Rome’s Tourism Councillor, said that rescheduling is “out of question” and that “all recommendations from the local medical authorities will be adopted” with the help of the event’s organisers and staff on the ground.

At the time of writing, there is also no indication that the Italian government will consider postponing other major live events scheduled to take place in the coming weeks, though the situation is evolving rapidly and a U-turn on previous dispositions can’t be ruled out.

READ ALSO: At a glance: What are the Covid-19 rules in Italy now?

On this note, it is worth mentioning that Italy has now scrapped all of its former Covid measures except the requirement to wear FFP2 face masks on public transport (though not on planes) and in healthcare settings.

The use of face coverings is, however, still recommended in all crowded areas, including outdoors – exactly the point that leading Italian doctors are stressing in the hope that live events will not lead to large-scale infection.

Antonio Magi, President of Rome’s OMCEO (College of Doctors, Surgeons and Dentists), said: “Our advice is to wear FFP2 masks […] in high-risk situations.”

“I hope that young people will heed our recommendations and think about the health risks that their parents or grandparents might be exposed to after the event [they attend].”

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