‘Not Just an Italian Problem’: Coronavirus Threatens Europe’s Economy

Coronavirus, International Trade, Eu, Codogno, Italy

The spread of the deadly epidemic to Europe’s fourth-largest economy has heightened fears of disruption in the global supply chain.

Coronavirus, International Trade

2/26/2020

The spread of the deadly coronavirus epidemic to Italy , Eu rope’s fourth-largest economy, has heightened fears of disruption in the global supply chain

The spread of the deadly epidemic to Eu rope’s fourth-largest economy has heightened fears of disruption in the global supply chain.

. The specter of an epidemic spreading rapidly in Italy raised the prospect of a new shock in a region that was already struggling to muster vitality. The sense that the virus could swell into a global crisis gained momentum as Iran was identified as the source of cases that have emerged in Iraq, Afghanistan, Bahrain, Kuwait, Oman, Lebanon, the United Arab Emirates and even Canada. Germany, Europe’s largest economy, has in recent months suffered a pronounced slowdown in factory orders as its auto industry grapples with increased fuel-efficiency standards, and as China’s growth slows. Chinese factories buy enormous volumes of petrochemicals and machinery from German suppliers. The Trump administration’s trade war with China has hurt Germany’s exports by limiting China’s industrial growth. The coronavirus has worsened this trend by keeping Chinese factory workers home. Britain’s departure from the European Union threatens to curtail investment in Europe as multinational corporations await clarity on trade negotiations about the future of commercial dealings across the English Channel. Italy has remained a perpetual source of concern for Europe — an economy that has not grown in two decades, with alarming levels of public debt and banks stuffed with bad loans. As one of 19 countries that share the euro currency, Italy must abide by strict rules on public spending, further limiting growth and making its companies especially dependent on trade. Italy sold some $550 billion worth of goods and services abroad in 2018, according to the World Bank . “Because of the austerity that is ingrained into Italian economic policy, the domestic market is not growing,” said Servaas Storm, an economist at Delft University of Technology in the Netherlands. “So firms that want to grow have to do it through exports.” The coronavirus has landed in Codogno and the surrounding region of Lombardy, as well as the neighboring areas of Piedmont and the Veneto. Collectively, they account for nearly one-third of the national economy. “This is really the industrial heart of Italy,” said Nicola Borri, a finance professor at Luiss, a university in Rome. “You have thousands of small companies that are active in exports. It’s a very dynamic area of the economy, on par with the most developed parts of Germany. It’s also very interconnected.” That interconnectedness is the element that makes the outbreak a potentially dangerous wild card in the European economy. More than 12 percent of Italy’s exports are sold in Germany, many of them auto parts. If Italy’s factories have trouble making their products, that could lead to shortages of components and disrupt plants in Germany and throughout Europe. This was the point that Mr. Falchetti and MTA were making in beseeching the regional government to allow some of its people to get back to work. “We can’t get the merchandise where it needs to go,” said Maria Vittoria Falchetti, Mr. Falchetti’s sister and a part-owner of MTA. “We can’t respect deadlines and delivery dates that we have committed to because of the effects of the lockdown.” With verifiable facts greatly outweighed by variables, economists are struggling to forecast the likely effects of the coronavirus. But estimates for growth are being revised down. Oxford Economics, a research institution in London, was previously expecting the Italian economy to stagnate this year. Now it expects a slight contraction in the first three months, with a longer downturn if the epidemic prompts consumers to cut back on their spending. With businesses closed and many people staying home, a drop in consumer spending seemed like a distinct possibility. “There’s a bit of a sense of panic in the air,” said Nicola Nobile, Oxford’s chief Italian economist, based in Milan. “Italy is going to be hit. The impact is definitely going to be felt. This is more bad news for Italy.” MTA has lately produced good news. Started by Mr. Falchetti’s grandfather in 1954, the company has turned its engineering prowess into a global brand with eight factories around the world. As the coronavirus emerged in the Chinese city of Wuhan, a major industrial hub, cities throughout China imposed restrictions on factory production. The epidemic was spreading in the midst of the Lunar New Year, a holiday when hundreds of millions of migrant workers return to their villages in the countryside. Cities like Shanghai extended the holiday to keep those workers home, hoping that this would limit the reach of the virus. Mr. Falchetti sought to respect the restrictions while keeping production going on a severely limited basis. He imposed emergency measures. “Every worker had to pass through three different control stations before entering the building, and we checked each person’s temperature every two hours throughout the day,” Mr. Falchetti said. “Fortunately the controls and checks instituted in China have worked.” But just as the Shanghai factory was returning to normal, a 38-year-old man in Codogno sought treatment for flulike symptoms, triggering a test that showed he had contracted the coronavirus. Within days, the Italian government confirmed more than 150 cases in the country, with an especially worrying cluster in the area of Codogno. Soon, the regional government ordered that factory production cease. On Thursday, the national government announced an aggressive response — a quarantine zone centered on Codogno that affected about 50,000 people. “Our first reaction was entirely supportive,” Mr. Falchetti said. “The health of our workers is paramount. Everyone wanted to make sure there were no unnecessary risks.” But a week later, he worries that the quarantine is delivering a different kind of emergency — an economic crisis. “I’m not sure the government, or anyone else for that matter, really realizes the economic damage this kind of forced inactivity can inflict,” Mr. Falchetti said. “You need to get back to work, to stay active, to rebuild.” He cannot visit his factory, leaving him to stew at home. He stares at his computer, keeping abreast of orders he cannot satisfy, while breaking off to play the piano. “It helps me relax,” he said. Jack Ewing contributed reporting. Read more: The New York Times

'deadly?' You want deadly. Try Ebola with an 80% mortality rate. 2% ain't so bad. How about flu over the corona virus In terms of number, probably more serious is flu, I guess. The expression 'the deadly coronavirus epidemic' must be criticized as 'fake news'. Second-largest economy,please. A cure for Coronavirus is available, tested and trusted and approved by God Himself. King David Healing Holy Oil A simple healing balm Make an order Dm if interested

Funny that it's all really about The Economy. Why is that? Get your supply chain out of china and no worries! Perhaps Italia is safe because people are eating good /hygenic food. Not reptile ornot eating dead meat.More over very few cases and perhaps many of them on recovery stage/safe. May Allah have mercy on all

The fear and the idiocy are the problems, not any virus. ruina

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