Italy’s key sectors hit hard

rome — Italy’s economy, which was already contracting at the end of last year, looks sure to be thrown into yet another recession by a sudden outbreak of coronavirus that has rocked the country.

More than 220 people have come down with the virus in Italy since Friday, latest data showed, the vast majority in the wealthy northern regions of Lombardy and Veneto. Six have died.

Like common influenza, the highly contagious illness is most dangerous for the weak and vulnerable. The same is true for its economic impact, and in terms of gross domestic product growth, Italy is as vulnerable as it gets.

The euro zone’s third-largest economy has been the most sluggish in the 19-nation bloc since the start of monetary union.

It shrank by nine per cent in the wake of the 2008 global financial crisis and has recovered only about half of that since then.

Italian GDP fell by 0.3 per cent in the fourth quarter of last year from the previous three months, yielding full-year growth of just 0.2 per cent. Economists expected it to fare little better this year — and that was before the coronavirus hit.

Lorenzo Codogno, head of London-based LC Macro Advisors and a former chief economist at the Italian Treasury, said he is now forecasting a GDP drop of between 0.5 per cent and one per cent in the first quarter, plunging Italy into its fourth recession since 2008.

Looking to slow the worst flare-up of the disease outside Asia, authorities across northern Italy have shut schools, universities and museums, and banned public gatherings including football matches and the famed Venice carnival.

Lombardy, around the financial capital Milan, and Veneto account for around a third of Italian GDP and half its exports. “The first impact will be on tourism and retailing, with people staying at home and cancelling hotel reservations,” Codogno said. “But even more damaging will be the later impact on companies through disruptions in supply chains.”

TheMilanstockmarketwasdown six per cent , heading for its worst day since 2016.