With its high infection rates, Italy is the epicentre of the European corona crisis. There, the corona virus Sars-CoV-2 continues to spread. Almost 10,000 people have been infected in Italy and the number of deaths is almost 500.
After initially only a few villages were quarantined, on 8 March the government declared large parts of the economically strong north a restricted zone and restricted the freedom of movement of around 16 million people. However, since quite a few people from the north to the south of Italy are likely to have moved, in a further step on 9 March the closures and restrictions on freedom of movement were extended to the whole country.
International train and air connections and local public transport are not to be suspended, but will be subject to tight controls. Schools, universities and kindergartens throughout the country will remain closed until at least 3 April. Sporting events will be suspended and tourism will come to a standstill. About 60 million people are affected by the measures.
These measures will have considerable economic consequences. After Italy’s economic output had already declined slightly in the final quarter of 2019, we expect a significant decline in gross domestic product in the first half of 2020. If, as in China or South Korea, the Italian government succeeds in reducing the number of new infections in the coming weeks on a sustained basis and limiting their spread by means of the measures described above, then an improvement in the economic situation can be expected in the second half of the year. Nevertheless, a significant contraction in economic output must be assumed for the year 2020 as a whole.