Bank of Korea: "Italy Expected to Have Negative Growth in First Half... Impact of COVID-19 Spread"

Bank of Korea, Overseas Economic Focus
Rising Concerns Over Economic Downturn Due to COVID-19 Spread

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Due to the spread of the novel coronavirus infection (COVID-19), Italy is expected to remain in negative growth not only in the fourth quarter of last year but also in the first half of this year. Major investment banks are also revising down their economic forecasts for Italy, raising concerns about a recession.

According to the 'Overseas Economic Focus' published by the Bank of Korea on the 15th, the key industry of tourism is expected to shrink significantly as the influx of tourists from Europe, including Germany, as well as China, decreases. The share of tourism in Italy's gross domestic product (GDP) is 13.2%, which is lower than Greece (20.6%) and Spain (14.6%) but higher than the UK, France, and Germany.

The Bank of Korea explained, "As of the 10th, the number of confirmed COVID-19 cases was 9,172, the second highest after China, and since infections are concentrated in the economically vital northern region, a significant economic impact is expected."

Major investment banks have also revised down their economic forecasts for Italy. HSBC adjusted from 0.4% to -1.9%, Credit Suisse from 0.7% to 0.5%, and Bank of America from 0.3% to 0.2%, respectively.

It was also analyzed that tourism revenue will decline due to the decrease in tourist arrivals. The Italian Trade Association estimated that if the current situation continues until June, tourism revenue could decrease by 5 to 7 billion euros.

There are concerns that the recovery of the manufacturing sector may be delayed due to disruptions in imports of intermediate goods from China and a contraction in global trade. Chinese intermediate goods account for 5.4% of total intermediate goods imports.

Meanwhile, South Korea is also expected to record negative growth in the first quarter for the second consecutive year due to the impact of COVID-19. The negative growth rate in the first quarter of this year is expected to be larger than that of the same period last year.

This content was produced with the assistance of AI translation services.