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Italy, locked down by pandemic, will see 3-5% contraction in economy

发布时间:2020-03-16

The coronavirus outbreak is jolting Italy's economy as the country is on lockdown and lacks supply of intermediate goods from China, which will largely affect the country's manufacturing industry, an Italian official and business representative told the Global Times.
 
Italy is among the hardest-hit countries in Europe by the virus, which has infected more than 12,000 people and claimed more than 800 lives so far.
 
Rolling out stricter measures, the Italian government announced on Wednesday that all shops except for supermarkets, food stores and chemists should be closed, and that companies must shut all non-essential activities.
 
Michele Geraci, former undersecretary of state at the Italian Ministry of Economic Development, told the Global Times in an interview on Wednesday, "If we block the country for one month, the supply goes down, and there is nothing that can be done to compensate because there is not enough production, so we will take a hit."
 
He estimated Italy's GDP would decline by 3-5 percent in 2020 due to the impact of the virus.
 
Data from the Italian National Institute of Statistics showed the country registered a 0.3 percent GDP growth rate in 2019, its lowest since 2014.
 
The government on Wednesday ramped up supports to cushion its weakened economy by allocating 25 billion euros ($28.3 billion) to support businesses. But that expenditure seems to fall short, according to Geraci, who suggested the figure should be hiked to 50 billion euros in order to tackle the virus blow.
 
The pandemic, spreading rapidly worldwide, has disrupted the global supply chain and affected normal trade and economic relations between Italy and China.
 
"China and Italy have a relationship which is very much integrated in the whole global supply chain," Geraci said.
 
Apart from official data showing 13 billion euros worth of exports from Italy to China, "we have exports of another 15 billion euros - almost double - via third countries and the supply of intermediate parts. For example, [our supply] to German car manufacturers that is then exported to China," he noted.
 
Worries have emerged in Italy that import demand from China will shrink. Also, China' supply shortages will cripple Italian manufacturing companies to some extent.
 
"China supplies our manufacturing companies because they don't have components and they cannot produce [them]. And this is the biggest impact," Geraci said.
 
Data from China's Ministry of Commerce shows that the China-Italy bilateral trade of goods hit $54.9 billion in 2019, up 1.2 percent year-on-year. China is now Italy's largest trading partner and its third-largest source of imports, especially for components, textiles and manufacturing. The two countries signed a memorandum of understanding in March 2019 to jointly promote the Belt and Road Initiative.
 
Secretary General of the Italy-China Chamber of Commerce Marco Bettin told the Global Times on Wednesday that governments across the world, including the Italian government, are taking drastic measures to cope with the health emergency. "Nowadays it is really hard to say when the trade between Italian firms and their Chinese partners will return to normal," Bettin noted.
 
"We could think that from June, China will be brisk in business again and even stronger and [more] determined. Now I could say that for China, that target, I believe, can be achieved, while for Italy it is hard to predict," he added.
 
The coronavirus is also playing a role in dragging down the trade ties between China and Europe in 2020, a landmark year to expand this relationship through the bilateral investment treaty - a deal following a decade-long process which was expected to be signed in Germany in September.
 
"I think the deal will be delayed," said Geraci.
 
"Let's say in two months, everything goes back to normal in the world. We still need time to re-adapt to the new situation. Maybe there is always, in the back of people's minds a lingering risk," he noted.
 
The agreement is rightly postponed once all parties are clear about what is going on in the world, and there is no real need to anticipate otherwise until the right time comes, said Geraci.


Source: Global Times