As the novel coronavirus spreads across the world, among the hardest hit nations is Italy. It has just over 2,500 confirmed cases and a death toll of 79. No one questions that the disease there will spread considerably. Italy’s gross domestic product, much of which relies on tourism, could be massively damaged this spring.
So far, COVID-19 is mostly concentrated in Lombardy, Veneto and Emilia-Romagna. It has spread enough beyond that so that the central government has closed all universities and schools. The move will last until at least mid-March. The indirect message to travelers is clear: “Do not visit.”
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Italy’s nominal GDP is just short of $2 trillion, which puts it third in the European Union behind Germany and France. As an advanced economy, it has a large manufacturing sector. Much of its economy is agricultural. Tourism accounts for 14% of the nation’s economy. If this is undermined substantially, and for months, the nation could face the same level of financial trouble that it did during the financial crisis.
No one has a reasonable estimate of how long the virus will plague Italy. Certainly, the World Health Organization believes the virus will spread around the world and may worsen well into the spring. The most aggressive forecast is that the disease will hit 30% of the world’s population. Under those circumstances, tourism will be undermined in every country in the world.
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Italy has more to lose than most countries, and the disease is already widely spread there. The financial byproducts of the problem have just begun.
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