Experts ponder Italy’s road to economic recovery from coronavirus

  ROME, March 24  -- The economic consequences of Italy's battle to contain the coronavirus could be felt for years, and domestic production is likely to be further hindered by the slow economic recovery of Italy's main trading partners, according to analysts.
   Over the weekend, Italian Prime Minister Giuseppe Conte announced a further tightening of the national coronavirus lockdown, ordering all factories and offices not playing a "vital" role in the country's coronavirus efforts to remain closed for at least two weeks. This has brought the country to a near-total economic standstill.
   According to Lorenzo Codogno, founder and chief economist of LC Macro Advisors Ltd. and visiting professor at the London School of Economics, the economic fallout from the slowdown will stretch out far beyond the shutdown of factories or the overall lockdown.
   "Before the factories closed, probably two-thirds of the economy was still working in some way," Codogno told Xinhua. "Now 90 percent of it is probably shut down."
   Codogno produced economic models before the latest developments estimating that the Italy's economy would likely contract by 3.1 percent to 6.5 percent in 2020 compared to government projections of 0.5 percent growth this year before the outbreak hit the country. Now, Codogno said he expects a contraction of between six percent and eight percent.
   Still, few are questioning Conte's decision to tighten the country's lockdown, which was based on the advice of an array of medical experts. Limiting the movement of people who might be infected is the only way to slow the spread of the virus.
   Codogno said that Italy will likely benefit from lower interest rates, given that other countries are going through similar slowdowns due to the global nature of the pandemic and that the European Central Bank has made it known that it will work to keep interest rates low. That will help "soften the blow" to Italy's economy, Codogno said.
   According to Fedele De Novellis, head of macroeconomic forecasts with REF Research, Italy's post-coronavirus economy will likely recover in an uneven way.
   "You can imagine the lockdown coming off in stages, with factories starting up again quickly, consumer sectors coming back slowly, and then other sectors like tourism taking longer, as people are nervous about traveling at first," De Novellis said in an interview.
   De Novellis said the specifics of the recovery will depend on some unknown factors -- when the pandemic will end, how healthy Italy's public debt situation will be at the end, and how strongly other countries will emerge from the global crisis.
   "It's possible that the stimulus packages all over the world will help bring about some kind of economic boom that could help Italy's export sector," De Novellis said.
   Codogno agreed, predicting that macroeconomic data will reveal a significant economic slowdown in the soon-to-end first quarter of 2020, a deeper slowdown in the second quarter, but then "a modest" recovery starting in the second half of the year with the worst of the impacts of the crisis past.  Xinhua