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In drastic step, Italy shuts most factories to halt virus

PTI | Soave | Updated: 27-03-2020 01:47 IST | Created: 27-03-2020 01:24 IST
In drastic step, Italy shuts most factories to halt virus
Representative image Image Credit: ANI

Italy has become the first western developed nation to idle most of its industry to halt the spread of the coronavirus, in 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. The industrial closures put in stark contrast concerns over protecting lives in a country with an especially vulnerable aging 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 euros ($77 billion-$110 billion) of national wealth a month if 70% 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 5% to 15% this year - and that assumes a recovery toward the end of 2020 and takes into account a 25 billion-euro aid package and 350 billion euros in credit lines. The Italian Treasury has put the virus hit at 5% to 7% of GDP in 2020. ''The economic consequences of the suspensions risks to be unsurmountable 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.

The government decree mandates the industrial shut down for one week, but as with the rest of the harsh containment measures they are likely to be extended depending on the pace of contagion. It's a sobering prospect for other countries in Europe and for the United States, where President Donald Trump has said he aims to have commercial businesses reopen by mid-April, despite warnings from health experts that that is unlikely. There has been no discussion of closing U.S. manufacturing as a nationwide measure.

Unions in Italy have fought especially hard to have more sectors considered nonessential in order to protect workers. They won limits on activity at call centers as well as the production of wood and plastic packaging, paper and chemical products. The powerful CGIL union confederation had said the government's initial list counted 800,000 companies as essential, with workers numbering 7.5 million, or 57% of the workplace.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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