The country faces a probable technical recession due to the coronavirus crisis, which mainly affects tourism and exports, sectors that drive the country’s economy.
China, Japan, South Korea and, now, Italy. The outbreak of coronavirus has now targeted Italy, after the first cases of infection registered in the regions of Lombardy and Veneto. The panic has taken over the country, which have led to closure of schools and businesses and puts in check an economy that was already in danger.
The Gross Domestic Product (GDP) of Italy shrank 0.3% in the last quarter of 2019, the biggest drop in six years. The impact of the coronavirus could aggravate the situation in the coming months as the outbreak directly affects sectors such as tourism, which in addition to exports, is one of the engines of the country’s economy and one of the most vulnerable to the situation.
Restrictions on travel, work, supply chains, and tourism could lead Italy to a technical recession, which would mean the country’s fourth recession since 2008. In parallel, the Italian index Ftse Mib, the country’s main stock market indicator, closed on Monday with a fall of 4.6%, the worst day since June 2016. On Tuesday, the Ftse Mib fell 1.44%.
Italy contracts its GDP by 3% in the fourth quarter of 2019
Fashion is one of the sectors where the coronavirus has had a direct impact. The outbreak coincided with the festivity of the Milan Fashion Week, which was scheduled from 18 to 24 February. Since then, numerous companies have taken measures in the face of this crisis.
Armani was one of the first companies in the sector to take measures against the coronavirus. The Italian company decided to present its collection, setting a fashion show behind closed doors, without journalists or buyers, and shared it on social networks.
Additionally, the group has also made the decision to close its production centers in Lombardy, Emilia Romagna, Veneto, Trentino and Piedmont for a week. In addition, Armani has also closed its headquarters located in Milan.
Armani staged its fashion show during the Milan Fashion Week behind closed doors
On the other hand, Moncler has also proceeded to close its headquarters in Milan and in Trebaseleghe, the same action carried out by Luxottica, while Kering has encouraged its employees to work from their homes. Also, Tod’s has created a fund to help the families of ist employees in case of infection.
The fair sector has also been hit by the coronavirus epidemic. The Italian fair Mido has postponed the celebration of its new edition, which was initially going to take place between February 29 and March 2. The organizers have explained that the event may be held at the end of May.
Meanwhile, Cosmoprof cosmetics fair has announced that it will equally cancel its edition, which was to take place between March 12 and 16. The organizers are considering new dates for the event, which may take place between June 11 and 15.
Milan occupies the position of 44 among the most attractive cities for retail
Milan is the main city affected by the coronavirus, where tourism estimates 12%. The metropolis annually welcomes about nine million tourists, of which 400,000 of them are Chinese.
In addition, Milan has one of the most expensive shopping streets in the world. In Via Montenapoleone, in the heart of the city, the price per square meter per year amounts to 13,700 euros. In this street, are located important operators such as Gucci, Burberry, Pinko, Moncler, Versace or Prada, among others.
The city is also one of the most attractive for international retailers, according to the Hot Retail Cities report, prepared by Modaes.es with the collaboration of Tendam. Due to its status as the economic capital of the country and the city of fashion shows, one of the most important in the world, Milan is in position 44 among the most attractive for the sector.
The regions most affected by the coronavirus, Lombardy and Veneto, are also the main hubs for fashion in Italy. In Lombardy, there are around 15,000 companies specialized in the textile and clothing industry, which employ 97,000 workers. In fact, production in the region accounts for 22% of the total textile production in Italy.