March 10, 2020 / 12:52 PM / 24 days ago

Coronavirus crackdown is cutting Italy's GDP by 10-15% - economist

ROME, March 10 (Reuters) - Italy’s lockdown measures to try to beat the coronavirus are reducing its economic output by around 10-15%, a former Treasury chief economist said on Tuesday.

People in the whole of Italy, Europe’s worst-affected country, have been told to stay at home if possible - only moving for work, health reasons or emergencies - among a raft of measures imposed by the government.

With streets semi-deserted and many shops and restaurants closed, Lorenzo Codogno, head of London-based think tank LC Macro Advisors, estimated that daily gross domestic product (GDP) was now running 10% to 15% below normal levels.

Codogno, who was the Italian Treasury’s chief economist from 2006 to 2015, said tourism and transport were down about 90%, the retail sector excluding food stores was down 50%, and factory output was taking a hit of about 10%.

He forecast a quarter-on-quarter GDP contraction of 1.2% in the first quarter, followed by a drop of 3% in the second quarter.

Italian GDP fell 0.3% quarter-on-quarter in the last three months of 2019, before the coronavirus outbreak struck, meaning the euro zone’s third largest economy is almost certainly already in recession.

“Nobody knows how long these measures will stay in place, so it’s impossible to make a serious forecast of GDP for the full year,” Codogno said.

The government has said its crackdown will remain in place at least until April 3.

“Based on an assumption that the measures are lifted at the end of April, I expect output to recover in May and then rebound in June,” Codogno said. (Reporting by Gavin Jones, Editing by Timothy Heritage)

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