News Analysis: Italy's economy staggering as coronavirus outbreak spreads, stock down nearly 35 pct

0 Comment(s)Print E-mail Xinhua, March 18, 2020
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ROME, March 17 (Xinhua) -- The Italian Stock Exchange had its second-biggest gains in nearly a month during Tuesday's trading session, but that wasn't nearly enough to offset the battering the markets took since the start of the coronavirus outbreak last month.

Even counting Tuesday's 2.8-percent gain, the Milan-based bourse has lost ground in 12 of the last 15 trading sessions. Despite a relatively strong start to trading at the start of the year, the main blue-chip index is now down 34.6 percent in 2020. All told, the 350 companies listed on the Milan bourse have seen their combined value drop by more than 13 billion euros (14.5 billion U.S. dollars) so far this year.

The Italian economy, which the Bank of Italy originally expected to grow by around 0.5-percent this year, is now expected to contract by 3 percent or more, depending on how long the Italian outbreak of the virus lasts and how severe it becomes.

The coronavirus pandemic, which has infected people in over 150 countries and regions, has been a body blow to the global economy. Stock exchanges across the world have been battered by coronavirus fears, but Italy -- which had already been struggling to reverse anemic economic growth even before the outbreak -- is among those hit the hardest.

As of Tuesday, there are more than 26,000 active cases of coronavirus in the country, by far the highest in the world. The total death toll in the country surpassed 2,500, second in the world only to China.

The question is whether the economic slowdown in Italy will spread across Europe.

"We have no way to even make a good guess about how much longer Italy will be under this weight or how seriously it will hit other European economies," Giuseppe De Arcangelis, a professor of international economics at Rome's La Sapienza University, told Xinhua. "But we can say one thing: it's not going to be easy for anyone."

The Italian government is aware of the economic risks. On Monday, the government approved a 25-billion-euro (27.5-billion-U.S.dollar) spending package aimed at softening the blow of the outbreak on families and businesses.

"This is a weighty economic package," Prime Minister Giuseppe Conte told a news conference. "We never intended to face this flood with mops and buckets."

But economists worried the package may be too small, noting that Germany, with an economy nearly twice the size of Italy's according to International Monetary Fund data, recently unveiled a package of aid and guarantees worth 500 billion euros (550 billion U.S. dollars).

"The 25 billion euros the government announced is a lot from the government's point of view, but it's too insignificant to do what it is intended to do and the economy will suffer for that," Nicola Borri, an economist with LUISS University in Rome, said in an interview. Enditem

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