Italy locks down

The broader European economy braces for virus' impact

The Italian government has revealed more about the spread within the country of coronavirus, which the World Health Organization calls Covid-19, and which first emerged in the Chinese city of Wuhan late last year. Italy said the death toll from the virus had jumped by almost 100 to 463, causing it to overtake South Korea as the worst-hit country after the People’s Republic of China. It now has over 9,000 confirmed cases of Covid-19, although many cases of infection might have been missed in collating this total. Italy has one of the highest median ages in the world, and older people are more susceptible to the negative effects of coronavirus.

 

Prime Minister Giuseppe Conte first effectively shut down the northern region of Lombardy — the area around Milan, which is home to about 14 million people and is one of the richest and most industrialised areas of Europe — and then extended some restrictions to the rest of the country. Mr Conte went on television on Monday to declare that travel would be permitted only for work or family emergencies, and that sporting events would be postponed. This will require significant intrusion into daily life — travellers at airports will have to explain their reasons for travel, movie theatres and universities are shut, wedding receptions are forbidden, and bars and restaurants will have to shut at 6 pm and ensure that there is a distance of at least one metre between customers.

 

The Italian economy, which is one of the European Union’s largest, has not been very healthy in recent times. The government has also been in frequent disagreement with the European Union on the fiscal rules imposed on its spending. However, any extra spending to deal with the coronavirus’ effects will not be part of the deficit calculation; the Italian government has set aside $8.5 billion to deal with the outbreak’s economic impact. Even this large sum may, however, be insufficient when the fact that the entire economy is being effectively hobbled by the state of emergency. The question also is whether the rest of Europe will be able to manage the infection. Checkpoint-free travel across the national borders of the Schengen countries means that the virus may have radiated from the hot spots in northern Italy already. Cases, including from people who had travelled to Italy, have been reported in Germany’s financial capital of Frankfurt. Northern Italy may see the peak of the virus outbreak now; but it is likely that the rest of Europe, particularly those industrialised areas that are closely integrated with Lombardy, will see a peak in a few weeks.

 

From the point of view of controlling the outbreak, those countries with well-run health care services that have sufficient critical care beds will manage the consequences best, according to Italian doctors. But a world already dealing with weeks of critically low output from the factories in China will now have to consider the possibility that the export powerhouses of Italy and Germany might also be stopped in their tracks. The economic effects of Covid-19 will ripple out of China as surely as the virus itself has.