Italy may at last be turning a corner as the rate of new Covid-19 cases, as well as the number of deaths derived from the disease, continue to fall. On Sunday, deaths from the virus rose by only 433 – the lowest daily tally in a week – and the number of new cases dropped to 3,047 from a previous 3,491. The rate of hospitalised patients has also fallen in what has been the steepest drop recorded since the start of the epidemic. Though the numbers are still grim, they are well below the heights recorded in March. If the trend continues its downward slope over the rest of the week, it will likely strengthen the relief beginning to be felt around the country while simultaneously pressuring the re-opening of Italy’s businesses.
The nationwide lockdown that has banned all non-essential movement within the country is set to end May 3. However, firm plans have not yet been established as to how the country will begin to open its doors. Some have called to relax restrictions sooner, like Luca Zaia, the head of the northern Veneto region, where significant progress has been made to control the virus’ spread. “We either close everything and die waiting for the virus to go away, or we reopen and live“, Zaia said.
The outbreak remains heavily concentrated in the northern regions of Italy, particularly around Lombardy, Italy’s financial capital Milan, and the neighbouring regions of Piedmont and Emilia-Romagna. Lombardy accounts for more than half of Italy’s virus-related deaths, while Milan has faced a recent resurgence in cases, even as overall rates have dropped across the rest of the country. Most of the calls to open businesses are coming from these hardest-hit areas.
Lombardy, which accounts for 20 percent of Italy’s economy, wants to get back to business on May 4. Local government insists that it will be safe to do so, so long as safety rules are respected: keeping a distance of 1 meter between people, mandating masks for everyone, and continuing to work from home for those able to do so, as well as re-opening in shifts to reduce crowding.
Southern Italy has had far fewer cases than its northern counterpart. And yet, they also have less robust health services and the region is generally poorer. Citizens tend to live in more crowded, multi-generational housing, which is of particular risk to elderly family members. Students have less access to the internet for online schooling, threatening to further widen the student achievement gap.
Residents in the south have also experienced keen financial hardship as businesses were forced to close down. And without sufficient government support, local mafias have repeated tried and true tactics that allowed them to infiltrate the economy during last decade’s recession: offering financial lifelines to struggling businesses, taking a cut of government support when it eventually comes as payback, and roping people into indebtedness to their generosity in the meantime.
The Case for Re-Opening
The country has taken a massive financial blow due to the coronavirus and expects a budget deficit of 10 percent this year as a result – far off from the previously predicted 2.2 percent. Industrial production fell by 15 percent in March according to estimates by the Bank of Italy. Small banks are also at risk of going under as liquidity dries up.
The Bank of Italy’s Chief Supervisor Paolo Angelini, and its Head of Financial Stability Giorgio Gobbi, have called for the government to consider using public funds to ease mergers of smaller banks that are more at risk. “For banks that already had some elements of fragility, it is possible that government measures and supervisory actions are not enough to allow them to sustain the economic consequences of the pandemic”, they said in the text of a speech prepared for a parliamentary hearing. The IMF anticipates Italy will face an unforgiving recession, with an economic contraction of 9.1 percent. This is bad news for a country that is already weighed down by one of the world’s biggest public debts, with gross refinancing needs of more than 400 billion euros per annum.
Companies can expect to need 50 billion euros in additional liquidity between March and July to cope. The government approved an initial 25 billion euro stimulus package in late March, while continuing to work on additional measures. This includes aid to those trapped in the underground economy, and a compensation scheme to give between 1,500 and 14,000 euros to small and still smaller companies whose turnover has been wiped out by the lockdown. But many citizens worry this assistance simply won’t be enough. Business associations have repeatedly warned the government that blocking Italy’s economic engine, mostly concentrated in the hard-hit north, would result in pushing the whole country into an economic black hole.
Italy’s fashion leaders are especially keen to get back to work and rescue what remains of the traditionally profitable season. With a turnover of over 95 billion euros, the nation’s fashion and textile industry is one of the most important in the country and makes up for 41 percent of the sector in Europe. Germany comes in at a distant second, accounting for 11 percent of the sector across the eurozone. While textile and fashion plants are not deemed essential some re-opened and converted their production to make medical devices like masks and medical overalls to meet the rising demand.
“Fashion is a seasonal industry, and certain dates are not compressible. Not reopening shortly would mean giving up almost a year’s turnover”, said Carlo Capasa, the Chairman of Italy’s National Fashion Chamber (CNMI), in an online interview for Corriere della Sera. Capasa wanted the country to gradually ramp up production as early as April 20 in order to meet the delivery of fall and winter collections to shops worldwide.
For Italy’s fashion industry, it isn’t just about current losses, but also losing credibility in the market for the future. “We are closed, but other countries like France, Spain, Portugal, Turkey are starting to reopen”, said Claudio Marenzi, who oversees fashion at business lobby Confindustria, pointing out that the ban also had downstream economic implications for Italy as a supplier.
Confindustria Moda represents 65,000 companies in the textile, fashion, and accessories sectors. Most of them are small firms with only 15 to 20 employees, and their sales are highly dependent on foreign buyers. “This means that some brands may decide to switch to another supply chain, which in Italy is mainly made up of small companies. And once a company closes, you lose the know-how and you never recover.” Marenzi added.
The Case for Delaying Lockdown Ease
Some shops, like bookstores and children’s clothing stores, have started to re-open even before the lifting of the lockdown. But others are not sure the country is ready to begin business as usual and fear a resurgence of the pandemic if easements are made too early. Nearly 150 librarians wrote an open letter to the government explaining their decision to keep their doors shut. “The job of a bookseller includes communicating face to face, a practice that – if not clearly regulated – creates evident sanitary risks”, they wrote. “In addition, it’s a habit of whoever enters a bookstore to take, touch, check out a large number of books”, the letter added.
On April 18, Prime Minister Giuseppe Conte stated that Italy was not yet in a position to loosen the lockdown, and ruled out opening parts of the country before others. Medical experts have also urged caution, as Italy remains in the first stage of the emergency and cannot yet move to a so-called “Phase 2”. In the next stage, which would allow for some gradual lifting of restrictions, Italians would “coexist” with the virus – a benchmark that cannot be achieved until the daily increase in cases slows below 1 percent. “It’s way too early, the numbers in some regions are still very much those of a Phase 1 that has not ended yet”, World Health Organization official Walter Ricciardi told Sky Italia TV.
Public health institute Director Silvio Brusaferro has said that Italians will have to eventually find a cautious way to navigate the tricky balance between avoiding infection and working for their livelihoods. “Living with the virus means re-designing our days,” he told the Corriere della Sera daily. “Everyone has to give up something.”
Italy has the unenviable position of being the West’s guinea pig: as the first nation to endure a severe outbreak, Italy will also be the first to open – and set a model for others to either follow or avoid. Speaking at a news conference, Brusaferro said, “We must avoid any measure that causes the curve to climb again. There are no studies or literature on this. 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.”