Coronavirus outbreak: Italy announces nationwide lockdown

Bloomberg | Updated on March 10, 2020

Italy will become the first country in the world to attempt a nationwide lockdown to try and stop the spread of the highly-infectious coronavirus across what is Europe’s fourth-biggest economy.

The death toll from the virus, which is on the cusp of turning into a pandemic, is edging toward 500. Italy’s Prime Minister has called this the country’s “darkest hour,” inviting comparisons to the UK during the World War II. The effects, both psychological and economic, could be devastating as the government struggles to contain the damage.

“We need to change our habits right now,” Prime Minister Giuseppe Conte said at an unscheduled news conference on Monday evening. He ordered the nation to “stay at home” as he explained that “we are forced to impose sacrifices.”

Italian assets were already facing turmoil Monday as the Milan exchange remained open with no limitations despite calls to halt trading. Italy’s benchmark FTSEMIB Index dropped by 11.2 per cent, the most since June 2016, entering a bear market. It has lost over 25 per cent since the beginning of the crisis February 21. Bond spreads widened to the highest level since August 2019.

The business community appeared to rally around the prime minister on Tuesday. Marcella Panucci, director general of employers lobby Confindustria, said in an interview with Bloomberg TV that the full lockdown was justified. “We fear a shock on credit,” she warned, calling on the government to offer guarantees and investment to shore up an economy under siege.

Less than 48 hours after announcing drastic steps in the region around Milan, Conte is now moving to widen restrictions by decree to an entire population of more than 60 million. The initiatives in the north had appeared to yield limited results, as people are still able to move around freely.

“All of Italy is now closed,” Milan daily Corriere della Sera wrote on its front page Tuesday. “Everyone at home,” Rome-based la Repubblica wrote.

China’s steps

Now that Conte has sounded a global alarm, questions linger about the enforceability in Western economies of the kind of draconian measures needed to limit the number of people getting infected. The country’s health system is on the brink of collapse – and the obstacles in Italy is up against in practical terms are much greater than what China carried out in part of the country.

Chinese authorities didn’t impose travel restrictions nationwide, instead training their focus only on the most-impacted province, Hubei in the country’s center. It locked down a handful of cities – including Wuhan where the pathogen is thought to have originated – stopping air and rail travel and restricting those who could leave by car.

The measures, which started in late January, saw more than 60 million people effectively locked in, and remain in place.

The move restricted the virus largely within Hubei, causing cases in the region to multiply dramatically throughout February and stretching medical resources. Hubei set up temporary hospitals in gymnasiums and auditoriums, and people waited for hours in order to be tested or treated. The outbreak was more manageable across the rest of the country.

Panic button

The impact of the national lockdown won’t become clear for at least a month, Giovanni Rezza, head of the infectious diseases department at the Superior Health Institute told Corriere della Sera. “What matters more than government measures is how individuals behave. People haven’t realized how much they’re at risk.”

In Italy, schools and universities will be closed nationwide, all public events will be canceled and Italians won’t be allowed to travel without a business or health-related justification until April 3. Conte’s decision came after the number of cases in Italy soared by 25 per cent to 9,172 on Monday as reported deaths jumped to 463 from 366.

Italy’s Finance Ministry said Monday that the country is better off taking a short-term economic hit now to prevent a wider economic crisis. The government has amped up spending to 7.5 billion euros ($8.5 billion) to help cushion the economic impact of the virus.

Deputy Finance Minister Antonio Misiani said the government may seek a bigger package. “If necessary we will ask parliament for more than the 7.5 billion euros that has already been announced,” Misiani told newspaper La Repubblica. “The government will ask parliament to deviate from the deficit to do what is necessary to help Italian families and businesses.”

Published on March 10, 2020

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