Pandemic accelerated, Italy's slide into recession

The global stock market had defied the Corona pandemic for a long time and was, despite the most severe pandemic for decades, in record-breaking mood. The had r

BUSINESS
25 February 2020 Tuesday 18:00
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Pandemic accelerated, Italy's slide into recession

The global stock market had defied the Corona pandemic for a long time and was, despite the most severe pandemic for decades, in record-breaking mood. The had referred to some expert last-open as "schizophrenia".

Since a few days, the markets are concentrated, such as the DAX and the S&P500, but the strong increase in Infected Numbers from South Korea and watching the news from Italy. As a result, the most important Italian stock index FTSE Mib is broken into. With rates of approximately 23.150 points he listed, almost ten percent below the Five-year-High of 18. February 2020.

Economically strong North of Italy

affected For a stir not only in the case of luxury Fans has ensured that the fashion group Giorgio Armani was cancelled because of the pandemic, its fashion show in Milan, and the event only on the Internet has transferred. In addition, the group has placed its production facilities in the five Northern Italian regions of Lombardy, Emilia Romagna, Veneto, Trentino and Piedmont for a week still.

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From the Corona outbreak in Italy, affecting mainly the economically strong North and it came in many places to purchases hamster. The regions is Lombardy, 22 per cent of the economic output of Italy, on the Veneto 9 percent still. Even more important is whether the government can contain it to the Prime Minister, Guiseppe Conte, who leads a coalition of the Five star movement and the social Democrats, the spread of the Virus.

that Worries citizens and investors that it is in the centre of Milan, a large number of Infected, which could provide a strong spread of the Virus. However, the government has taken drastic measures, such as the setting of the air traffic from China.

Severe blow to the tourism industry

The burden for the Italian economy significantly, because the tourism industry is suffering greatly. In the past year, the number of Chinese tourists in Italy is a shot estimated at around six million. According to the industry Association, ENIT, you have spent around 650 million euros, an increase of more than 40 percent compared to the previous year.

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For additional headwind for the Italian economy is likely to ensure that many tourists from other countries to cancel their trips to Italy. This is likely to meet the local industry and thus the economy as a whole. According to the tourism Association, ENIT, the foreign tourists have spent between January and October 2019, approximately 40 billion Euro in Italy. Overall, the sector contributes six percent to the annual economic output of the country.

shipments from China are likely to break

in Addition, is likely to get the Italian economy to be felt in the coming weeks and months, the collapse of the delivery of numerous chains in China, which is why many are likely to be sent less products than in the past from China to Italy. The imports of Italy from China amount to the equivalent of about 30 billion dollars per year, or about 1.5 percent of the annual economic output of Italy.

at the same time, the economy is likely to dampen the crisis in China, the demand for Italian products. The exports from Italy to the middle Kingdom amounted to the equivalent of around 20 billion dollars per year.

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Renewed slide into recession is imminent

"The effects of Coronavirus on the world economy and in Italy is expected to be significantly negative," said the Deputy Minister of Finance, Antonio Misiani last. "It has become more difficult to reach the government's target of economic growth of 0.6 percent (for the current year)."

the head of The Central Bank of Italy, Ignazio Visco, has recently warned of "significant" downside risks. The EU Commission had already reduced the forecast to just 0.3 percent. How weak is the Italian economy, also shows that passenger Car sales fell in January 2020, 5.9 percent compared to the previous year.

Currently, the risk greatly increases that the economy is slipping again into recession, after economic output shrank in the fourth quarter by a surprising 0.3 percent, and is thus already known before the Corona to be pandemic was very weak. A recession is two consecutive declines. That would be the fourth recession in the last twelve years, whereby Italy is the problem child of the Euro would remain in a Zone.

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Italy's government can hardly wore against taxes

This is also the case that the industry was broken into production in December by 2.7 percent compared to the previous month. This was the largest decline since January of 2018. "The level of industrial production has now fallen to the lowest level since June 2016," wrote Christoph Swonke, economist at DZ Bank. The more nervous investors are at the 10. March to look at the industrial production data for January.

Raffaella Tenconi, chief economist at ADA, Economics, warned that a Shrinking of economic output this year was around one percent, "plausible". That would be the worst level since the European debt crisis in 2013.

the more the government Conte comes under pressure to stimulate the economy. But how is he supposed to do that, if economically important regions under quarantine and people do not come to work? Especially as the measures in case of a possible spread of the Virus, should be extended to additional regions.