A commuter, wearing a protective face mask, exits the ticket barriers at the Duomo station of the Milan Metro in Milan on Monday, February 24. Picture: BLOOMBERG/FRANCESCA VOLPI
A commuter, wearing a protective face mask, exits the ticket barriers at the Duomo station of the Milan Metro in Milan on Monday, February 24. Picture: BLOOMBERG/FRANCESCA VOLPI

Milan/Rome — Italy’s economic engine ground nearly to a halt on Monday amid Europe’s largest coronavirus outbreak.

Milan, the country’s financial hub, and the productive regions of Lombardy and Veneto were in virtual lockdown as schools, universities and museums closed, sporting events were cancelled and a curfew was imposed on bars.

The country is struggling to contain the spread of the virus, with 219 cases confirmed, emergency commissioner Angelo Borrelli said at a news conference in Rome on Monday.

Italian stocks and bonds tumbled on concern that the spread of the coronavirus may push the economy into a recession. Italy’s bonds underperformed German bunds by the most this year, while the FTSE MIB index extended its decline to as much as 4.9%, the biggest intraday fall since June 2016.

The surge in infections comes despite sweeping measures put in place by the government limiting travel to and from affected areas. Five patients have died while one case has now been declared free from infection, Borrelli said.

Adding to the concern, contagion seems to be spreading mostly through hospitals and it remains unclear exactly how the illness arrived in the country and who the initial spreader, or spreaders, were.

The hit to the economy from limiting movement and activity in the prosperous area from Venice to Milan, home to about 15-million people and responsible for almost a third of Italy’s GDP, is likely to be severe. All the more so as the country was already headed for a recession.

There were also signs of panic taking hold. Shoppers stormed supermarkets in Milan over the weekend as citizens worried that food stocks would run out. Staples like meat, bread and pasta were in short supply in some stores as consumers, many wearing surgical masks, waited in long lines to stock up.

Quiet streets

Milan’s usually bustling streets were eerily quiet on Monday, with few pedestrians venturing outside and typically crowded cafes mostly empty. Companies including UniCredit, Italy’s biggest bank, encouraged employees to work from home.

For the 50,000 people in the municipalities south of Milan, where the lion’s share of cases have been identified, measures are even stricter. All work activity has come to a halt with blockades preventing travel in and out of the area.

Analysts at Mediobanca called the virus spread effect a short-term macro headwind that could affect economic recovery as it affects the most productive regions. “The news flow is certainly worrying and if it is not resolved quickly, it is likely to have a burden on economic activity,” the investment bank said.

Matteo Salvini, leader of the League party, used the outbreak to attack Prime Minister Giuseppe Conte for not defending Italy’s borders. Italy needs “to make our borders armour-plated”, he said, calling on Conte to resign “if he isn’t able to defend Italy and Italians”.

A bus operated by Flixbus coming from northern Italy has been blocked at Lyon’s Perrache station in southeast France since Monday morning because of a suspected case of coronavirus, regional newspaper Le Progres reported.

Bad moment

The rise in infections comes at a bad moment for Conte’s administration, already under fire for failing to mount a coherent response to the spread of the virus. As Conte chairs a series of marathon meetings in Rome to counter the spread of the disease, his plan for tax reforms and investments to restart an ailing economy has stalled.

Efforts to contain the coronavirus could have been initially thwarted by difficulty in identifying the roots of the spread.

Most of Italy’s cases were initially linked to a 38-year-old man who sought treatment at a hospital in the Lombardy region on February 18. While there, he infected dozens of patients and medical staff, who then spread it further afield. Tracking efforts initially focused on a friend of the man, a business person who had returned from China, but tests proved negative and the origin of the contagion remains a mystery.

Bloomberg