Italy is in the grips of reopening suspense.
Italians know that the shattered economy is set to start opening up on May 4 after almost two full months of tight lockdown. But they don’t know which sectors will get the green light first, under what conditions or where; some regions with relatively few COVID-19 cases might get back to business before the hard-hit areas.
What they do know is that Italy, the European Union’s third largest economy and a Group of Seven member, will not reopen fast. Many businesses will continue to suffer as the country struggles to reduce its new infection rate.
In a Facebook message on Tuesday, Italian Prime Minister Giuseppe Conte said “I would like to be able to say let’s open everything right away … But such a decision would be irresponsible. It would lift the contagion curve uncontrollably and would frustrate all the efforts we’ve put in so far.”
Political analysts say that Mr. Conte has a problem because there appears to be no national unity on the reopening strategy. Governors, mayors and parliamentarians are all squabbling over the plan’s rollout, even if they agree it has to come with widespread virus testing, contact tracing and the use of face masks. There is no precedent to copy and all European countries are reopening different sectors at different speeds.
Italy has 21 regions with varying degrees of autonomy. Each has its own health system, economic strengths and weaknesses and novel coronavirus infection and fatality rates. “The overarching issue is to regain some unity and create a national plan,” said Francesco Galietti, CEO of Policy Sonar, a political consultancy in Rome. “For example, if coronavirus cases shoot up again in one region, do we lock down all of Italy or do we just isolate that one region?”
Italian industry and businesses have been pushing hard for details on a reopening strategy and Mr. Conte has said he and his economic and scientific advisers will reveal their plan later this week.
A delay risks triggering distress among corporate bosses and their employees because the Italian economy is already in deep recession. Economists expect Italian GDP to shrink by up to 10 per cent this year, with the budget deficit at a similar level as the government runs up debt to finance stimulus measures. In an interview Wednesday, Giuseppe Provenzano, the minister for the south of Italy (roughly from Rome to Sicily), said the GDP for the southern half of country is expected to fall 15 per cent this year, putting it into depression territory.
The country’s debt-to-GDP ratio, now at about 135 per cent, the highest among the big Western economies, is expected to shoot past 150 per cent, a potentially unsustainable level unless growth returns.
Italy was the first country country to go into full lockdown after COVID-19 spread from Wuhan, China, its original epicentre. The national quarantine started on March 9 and has prevented Italians from leaving their homes except to buy food and medicines or visit a doctor or hospital. Non-essential businesses were closed, and the supply and demand shock has been unprecedented outside of war. Car sales in Italy dropped 85 per cent in March, and gasoline sales fell 52 per cent. April’s figures are expected to show even deeper fall-offs.
The Italian government is fearful of reopening the economy fast because it dreads another surge, which epidemiologists say is inevitable if physical distancing rules are relaxed quickly. The country has the second-highest COVID-19 death toll, behind the United States; by Wednesday night, there were 25,085 confirmed fatalities and 187,327 confirmed cases.
The tight quarantine has produced some encouraging results. The recent fatalities are almost half of their March 27 peak, when 969 deaths were reported (437 fatalities were reported on Wednesday). The number of patients in intensive care units has dropped every day since April 3 and, for three days in a row this week, the total number of active positive cases has fallen.
The bad news is the number of deaths and new cases seemed to have reached a plateau, with no dramatic reduction in the number of deaths and new cases in the past 10 days or so.
The Italian economy was doubly punished by the coronavirus because Lombardy, the highly industrialized area where the main city is Milan, was hit first and hardest. The region, Italy’s commercial and financial centre, has recorded half of the country’s COVID-19 deaths and more than a third of total cases. “The crisis is hurting the areas that are most productive,” Mr. Provenzano said.
Lombardy remains Italy’s greatest problem. Until its infection rate falls dramatically, allowing its isolation measures to come off, the country’s commercial heartland will remain largely paralyzed.Attilio Fontana, the governor of Lombardy, has been pushing for a quick restart in the region even though its COVID-19 caseload remains tragically high. He has tried to devise his own opening plans, putting him in conflict with other governors, Mr. Conte and the mayor of Milan, who warned that an early reopening would be reckless unless the public health could be safeguarded.
Mr. Galietti said any national reopening plan might have to include an “automatic brake mechanism” that would quickly isolate areas that see a surge in cases without necessarily locking down the whole country again. “We will reopen the country but we are in a situation where all the regions are not equal,” he said.
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