In drastic move, country shuts most factories to halt virus

Soave (AP):

Italy has become the first western developed nation to idle most of its industry to halt the spread of the coronavirus, a potential cautionary tale for other governments, such as the Trump administration, that are resisting such drastic measures.

After more than two weeks of a nationwide lockdown, the Italian government decided to expand the mandatory closure of nonessential commercial activities to heavy industry in the eurozone’s third-largest economy, a major exporter of machinery, textiles and other goods.

The move by Italy, which is leading the globe in virus deaths, is more in line with draconian measures taken by China than with declarations coming out of other democratic partners, who are at least a week or two behind Italy’s rate of virus infections.

Industrial closures

The industrial closures put in stark contrast concerns over protecting lives in a country with an especially vulnerable ageing population against fears of hurting an economy that already was on the brink of recession.

The industrial lobby Confindustria estimates a cost of €70 billion to €100 billion (US$77 billion-US$110 billion) of national wealth a month if 70 per cent of companies are closed, as anticipated. Though some big companies had already suspended activities, thousands of smaller manufacturers had continued after adopting new safety regulations, and will now shut down.

“We are entering a war economy,’’ said Confindustria President Vincenzo Boccia.

Economists grow dizzy speculating on the possible economic drag in a country that never fully recovered from back-to-back recessions the last two decades. UniCredit bank’s chief economist, Erik Nielson, expects the economy to shrink by a staggering five per cent to 15 per cent this year - and that’s assuming a recovery toward the end of 2020 and takes into account a 25 billion-euro aid package and 350 billion euros in liquidity and credit. Another 25 billion-euro package has been promised. The Italian Treasury has put the virus hit at five-seven per cent of GDP in 2020.

‘’The economic consequences of the suspensions risks to be insurmountable, because the continuity of companies is being interrupted for a substantially undetermined period,’’ Il Sole 24 Ore, the respected business daily of the Confindustria lobby, wrote Thursday.