Italy can lose up to 3 percent of its 2020 GDP because of the spread of novel coronavirus disease (COVID-19), Michele Geraci, Italian economist and politician who was undersecretary of state at the Italian Ministry of Economic Development until September 2019, told Sputnik
GENOA (Pakistan Point News / Sputnik - 11th March, 2020) Italy can lose up to 3 percent of its 2020 GDP because of the spread of novel coronavirus disease (COVID-19), Michele Geraci, Italian economist and politician who was undersecretary of state at the Italian Ministry of Economic Development until September 2019, told Sputnik.
Earlier on Wednesday, Prime Minister Giuseppe Conte announced that Italy would allocate additional 25 billion euros ($28.3 billion) to fight the spread of the virus.
"Twenty-five billion is already much better than the original 7 billion. It's getting closer to the money that we really need, which I estimated around 37 billion, almost 40 billion. This is what the Italian economy needs now immediately," Geraci said.
A week ago, Conte's estimation of the sum needed to mitigate the negative effects on the economy was 7.5 billion euros.
"Twenty-five billion is getting to that level, but now actually even my estimation of 37 billion needs to be reviewed. It was true 10 days ago, but with the current lockdown of the country this number will increase. I now think it will stand at over 50 billion euro. This is the impact on the Italian economy. We will lose 3% of our GDP in 2020," he continued.
Italian Finance Minister Roberto Gualtieri said that on Friday Italy would adopt a decree on the economic measures amid coronavirus emergency worth around 12 billion euro. On Tuesday, Italian Industry Minister Stefano Patuanelli said in an interview with Radio Capital that the government was preparing a package of economic measures to support families and businesses amid coronavirus crisis, which would include suspension of payments of utility bills, taxes and mortgages.
"Tourism, manufacturing and all the exports will be mostly hit. Exports is one third of the Italian GDP and we have a high level of integration in the global supply chain, so any friction on that has a multiplying effect on the whole chain of suppliers. But the ones I identify most are tourism, manufacturing machinery and fashion. Fashion because we are losing the brand, the image on which fashion builds a lot of its value. So, all this 'made in Italy' style is losing value," Geraci said.
Italian economy is particularly vulnerable since it has been struggling to grow for several years and Italian public debt stands at around 135 percent of GDP.
"We have to go on debt. That's why [Minister for Economic Affairs and Finance Roberto] Gualtieri is asking for more flexibility from the European Union, which basically means more deficit, and that means issue more bonds. ... But we need the money tonight. We cannot wait for the European Union to arrange it," Geraci said.
President of the European Central Bank Christine Lagarde urged EU leaders in a phone call on Tuesday to take coordinated action on coronavirus outbreak in order to avoid a financial crisis similar to 2008, Bloomberg reported citing sources. EU Commission President Ursula Von der Leyen said the EU was ready to give 25 billion euros to help companies and SMEs to cope with the consequences of the virus-caused crisis.
"Ursula von der Leyen mentioned the budget of 25 billion for the whole of the EU. That's a half of what Italy alone needs. So she has no idea of the amount of money that Europe now needs. If we have to do it with Eurobonds, it has to be like 1,000 billion, one trillion. Europe needs to do whatever it takes, not [use] measures little by little," Geraci said.
Earlier on Wednesday, Chinese Foreign Minister Wang Yi said in a telephone conversation with his Italian counterpart Luigi Di Maio that China would provide humanitarian assistance, specialists, medical goods and equipment to Italy to help it combat the disease.
"I have to say that this is one of the many things that we didn't know at the time when we signed the MoU with the Belt and Road, we couldn't expect these kinds of situations, but the concept is that we are trying to build a close relationship not just on trade, but also on culture, exchange including on health - it was one of the issues on which we were doing joint researches and exchange of doctors. So now it is the situation in which MoU may also have been a factor that gave China a green light for its export of medical equipment to Italy," Geraci said.
In spring 2019, Italy became the first big European economy to join China's ambitious infrastructure project, Belt and Road Initiative.
Italy is the second-hardest hit by coronavirus after China. According to the country's ministry of health, there have been over 10,149 confirmed cumulative cases, including 631 deaths.
