Italy accepts economic trade-offs to fight Covid-19

Avatar of Nick John By Nick John Dec16,2023 #Covid #economic #Italy
Italy accepts economic trade-offs to fight Covid-19 3
Italy accepts economic trade-offs to fight Covid-19 3

Two weeks into the nationwide lockdown, the Italian government decided to extend the mandatory shutdown from non-essential commercial activities to the heavy industry of the euro zone’s third-largest economy.

The new move by Italy, the country with the highest number of deaths from nCoV in the world, is more similar to the strong solutions applied by China than other Western countries, where the outbreak has been slower than Italy.

The decision to shut down the industry shows that Italy has prioritized protecting lives in a country with a vulnerable aging population above fears about the risk of further hurting an economy already teetering on the brink.

Workers  assemble cars at Ferrari’s plant in Maranello, Modena province on March 8.

The Confederation of Italian Industry (Confindustria) estimates that about 70-100 billion euros (equivalent to 77-110 billion USD) of national wealth will `evaporate` each month if 70% of companies close.

`We are entering a wartime economy,` said Vincenzo Boccia, president of Confindustria.

Economists make dizzying predictions about the risk of economic slide in a country that has not really recovered from the recession of the past two decades.

Erik Nielson, chief economist of UniCredit bank, predicts that the size of the Italian economy will shrink by about 5-15% this year.

`The consequences of the economic freeze are at risk of being irreparable, as companies continuously have to suspend operations for an indefinite period,` said Il Sole 24 Ore, an Italian business newspaper.

The decree to `freeze` industry is in effect for a week, but other draconian epidemic control measures may last longer depending on the progress of Covid-19.

This is considered a serious warning to many other countries in Europe and the US, where President Donald Trump announced his goal of reopening the economy by mid-April, despite warnings from experts.

Following the shutdown decree by Prime Minister Giuseppe Conte, hundreds of thousands of large, medium and small companies will cease operations and workers will receive part of their salaries under the short-term unemployment scheme that has been extended to businesses

These companies include tire maker Pirelli, which accounts for 6% of global production, and Luxottica, the world’s largest eyewear maker, owner of brands such as Ray-Ban and Oakley.

The biggest concerns of small and medium-sized business owners are how long the Italian economy will be closed, how it will hurt cash flow and how it will hinder business operations.

`If the lockdown lasts two or three months, it may be as simple as turning the lights back on, because the supply chains and logistics are still operating very efficiently. But if the shutdown is longer, the habit of

Italy accepts economic trade-offs to fight Covid-19

Cleaning workers sit in a closed store in the commercial district of Vittorio Emanuele in Milan, March 11.

Olivari is a family-owned door handle manufacturing company based in the northern Italian province of Novara and survived two world wars when it switched to ammunition production thanks to its expertise in copper and aluminum.

Antonio Olivari, the company’s head of research and development, said the business, which employs 80 workers and has annual revenue of more than $16 million, could recover if it were closed for just two weeks to a month.

`But production at this time also makes no sense, because home stores and distribution channels are closed,` Olivari said.

People’s consumption habits and priorities are likely to change after the crisis.

Thanh Tam (According to AP)

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