After two months of lockdown, Italy is finally seeing a sustained reduction in new cases and coronavirus-related deaths, logging only 260 fatalities this past Sunday and 330 on Monday – the smallest increase seen since March 14. The number of individuals in both intensive care and the hospital in general has been steadily decreasing since early April, which means the contagion rate has finally dropped low enough to justify relaxing some lockdown measures. “The numbers are particularly reassuring”, Italian Civil Protection Department chief Angelo Borrelli told reporters.
The Mediterranean country has suffered brutally in the novel coronavirus pandemic – with a death toll of 26,000 – and the lockdown implemented to help control the spread has turned life in Italy upside-down. With non-essential businesses shuttered and citizens out of work, Prime Minister Giuseppe Conte’s government is seeking parliamentary approval for a government deficit of an additional 55 billion euros – more than doubling the 25 billion euro increase he sought last month. This would cause Italy’s budget deficit to rise to more than 10 per cent of economic output this year, and gross domestic product to contract by approximately 8 per cent.
The country is set to gradually lift restrictions beginning on May 4, allowing people to visit parks, see their relatives, and attend funerals, which were all forbidden activities under the lockdown. However, people will still not be allowed to travel between regions, and funeral gatherings may not exceed 15 people. If this easing does not cause the pandemic to roar back to life, then stores and museums could begin operations on May 18, and sports teams could resume group training. Restaurants, cafes, and hair salons would be next, reopening for sit-down service on June 1 if all goes well. Classes will only resume at the start of the new school year in September. During this “Phase 2” of the lockdown, however, social distancing and wearing masks in public are measures that will remain strictly enforced, and the price of face masks will be capped to 50 cents. Conte has not yet addressed how or when religious services will reopen, but did warn that coexistence with the virus until a vaccine is available means that Italians will have to totally redesign their lives.
During an announcement on Sunday, Conte outlined harsh realities saying “We cannot continue beyond this lockdown — we risk damaging the country’s socioeconomic fabric too much”, adding that the “damage” to the national fabric if the shutdown is not lifted “could be irreversible“. However, the prime minister also warned that “the curve of contagion can rise again, it will go out of control, deaths will climb and we’ll have irreparable damage” to the economy if people do not carefully adhere to the guidelines.
Health experts have warned that premature lockdown exits could set off a second pandemic wave, in turn leading to more shutdowns and greater economic pain. Waiting a few more weeks or months could potentially avert that cost. “There are no studies or literature on this”, said Silvio Brusaferro, the director of the Istituto Superiore di Sanità, at a news conference. “We are looking into scenarios that have never been taken before by countries that resemble Italy. Other nations are looking at us as a pilot programme.”
“We must not run into hasty decisions”, Domenico Arcuri, the prime minister’s coronavirus commissioner, said last week. “The virus is still among us — not quite as strong, but it is still there.”
Plotting a Careful Exit
The pressure to exit the lockdown has been mounting from the manufacturing and business sectors, which have taken an enormous hit in the last few months and warned of irreparable economic catastrophe if not allowed to resume operations soon. As it is, the economy is expected to contract by at least 8 per cent this year, and would be the worst recession Italy has experienced since World War II. Despite the promised stimulus package worth at least 50 billion euros, it remains to be seen if these measures will be enough to avert an economic catastrophe.
“From May 4, the manufacturing, auto, fashion and design sectors — along with many others including construction — will reopen, but only if they guarantee social distancing and protection measures”, Italian Deputy Health Minister Pierpaolo Sileri said in an interview on Thursday. State-owned shipbuilder Fincantieri has already re-opened its shipyards after more than a month of closures, though production was only permitted to restart at a reduced pace, with limited staffing and health safety precautions enforced.
Electricity consumption has already started to rise in both Italy and Germany, an early sign that the economy may be restarting. “Countries will most likely return to previous habits around energy use as policy makers strive to return economies to normality following the severe health and economic shock”, notes DBRS Ratings Ltd. However, natural gas and power prices will likely take years to bounce back to pre-crisis levels, even as power consumption revives. According to Aurora Energy Research Ltd, it could take four years for power prices to recover, and up to double that for natural gas to see pre-crisis pricing, especially if lockdowns continue into the fourth quarter.
Last week, Italy showed an encouraging 10 per cent rise in consumption during the morning peak compared to power usage the week prior, according to data from the network operator Terna SpA. Italy’s decrease in power consumption and demand has been one of the most stark in the entire eurozone, falling 26 per cent last week compared to a year earlier, according to grid industry group Entsoe.
The country’s prime minister has said that national efforts can only go so far and must be backed by European support – a contested issue that has embittered relations between the eurozone and Italy. Backed by fellow Southern European states, Italy has floated the idea of joint bonds, called “corona bonds”, in a move that would help share the cost of rebuilding European economies. But many wealthier northern European states, including Germany, have shot down the idea. A recent tele-conference with other EU leaders did not set the issue to rest, either.
“I don’t believe the upcoming meeting of the 27 leaders will find a definitive solution, but I will do everything…to ensure it expresses a clear political path in the only reasonable direction”, Conte stated. “The EU and the eurozone cannot afford to repeat the same mistakes they made in the 2008 financial crisis, when it was not possible to offer a joint response”, he commented, adding, “Either we all win, or we all lose“.
In a gesture of goodwill, German Chancellor Angela Merkel did pledge to back the short-term stimulus package after European Central Bank President Christine Lagarde told heads of government that the euro-area economy could shrink by as much as 15 per cent this year as a result of the pandemic.
Maurizio Cotta, a professor of political science at the University of Siena, noted that the EU has much to lose by not supporting Italy at this critical juncture. “So far, the lack of solidarity from Europe – whether real or perceived – has helped stir patriotic sentiment and unite the country behind Conte”, Cotta told FRANCE 24. “But in the longer run, the fate of Italy and its government will depend in a large part on the decisions that are made in Brussels.”
