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Italy Will Lose 2.1% GDP in 2020, in Analysis of Economist Geraci

March 5, 2020 (EIRNS)—Former Italian government official, economist Michele Geraci released his assessment on March 2 on his website, of the impact of the slowdown of the Chinese economy and of the coronavirus epidemic in Italy, combining direct and third-country effects, reaching the conclusion that, in 2020, Italian GDP will lose €37 billion, or 2.1%. On one side, there are the effects of the global value-chain into which Italy is locked; on the other side, Italy has lost credibility because of the government’s inadequate response to the crisis.

As for Italian exports to China, the official data of €13 billion are an underestimation, because they do not consider exports through third countries and intermediate (semi-finished) goods exported to countries such as Germany, which are used to produce final goods to export to China. If all these are taken into account, the overall export at risk is €26 billion. As Chinese imports are projected to fall by 20%, it means €5.2 billion for Italy.

Additionally, the economic loss due to the failure of supplies of intermediate goods from China will cost €4 billion. And the loss of exports to other EU countries and the U.S.A. due to the fall in their domestic demand because of a reduced demand from China, will be €5 billion. Last but not least, the impact on tourism, fashion, and “image damage” produced by the coronavirus epidemics could reach €11 billion for tourism and €7 billion for the fashion sector.

Despite the seriousness of the crisis, Geraci says the economy could recover if several measures are adopted, including “the creation of a task force of experts in international relations to hold relations with China in a more appropriate way than we have seen so far.” Furthermore, an extraordinary commissioner for foreign trade—currently, six months after the birth of the Conte-2 government, the foreign trade portfolio has not yet been assigned!

“We must exploit the crisis to implement a serious development plan, from R&D to infrastructure and transport, but it must be drafted in a few weeks, otherwise we will miss the train. Countries such as China do it in a few months, and they will rise stronger than before.”

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