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Coronavirus: the consequences on the Economy - Interview with Professor Umberto Triulzi

Updated: Mar 25, 2020

In this historical period during which we are overwhelmed by news about the Coronavirus, invitations to stay home and special editions on the news to listen to what the Italian Prime Minister Giuseppe Conte says, we try to focus the attention on the economic field through this short interview with Umberto Triulzi, Professor of European Economic Policy at the Department of Social and Economic Sciences of Sapienza University of Rome. He was the Director of the Department (2009-2011) and of the Sapienza Master “Migration and Development”. He is currently Professor of European Economic Policies and International Economic Policy at Luiss University and at the School of Specialization for Law Enforcement. He’s the author of many essays on Economic and International Economic Policy, Economic Development and European Integration.

As a result of the Coronavirus, how do you think the International Economic Institutions will act?

The spread of the Coronavirus is affecting many EU countries even if infected people and the mortality rates within the Member States show divergent numbers. UE has been slow to act with respect to the spread of the epidemic, because of lack of a real expertise about this issue and because of different measures implemented by each country to contain and slow down the spread of the virus.

According to you, what actions should be taken by the European Central Bank (ECB)?

The ECB has clearly no competence in this field but can take action with monetary instrument to contain, at least partly, the negative impact on the economy caused by the virus (the slowdown in production and consumption); reactivating, for instance, monetary easing policies (the purchase of government bonds by Member States) to enhance liquidity for companies, especially for the medium-small ones which are the most affected by the crisis.

Which are the consequences of the epidemic on the Italian economy? In particular, on the Italian export and tourism?

The most affected sectors are: tourism and all the activities linked to it (food service, hotels, travel agencies, museums, exhibitions etc.); the manufacturing sector, especially productive enterprises more interconnected and dependent on import-export activities; goods and passengers transportation to or from Italy in the rail, air and naval field. The estimates carried out by some international organizations forecast a fluctuating contraction of the Italian GDP during the year 2020, in the less pessimistic case, between the 0.5 and the 1 percent of the Gross Domestic Product and, in the worst case, between the 1 and the 2 percent.

What do you think about the proposal made by some Italian politics about a new European Marshall Plan?

Italian politics should stop speaking about “Marshall Plans” everytime we face big economic crises, in Italy and in the world. It’s clear, in fact, that to get out of the serious recessive situation in which Italy currently is, it is necessary to immediately activate extraordinary spending plans to support the domestic demand and to give confidence to national and foreign operators about the capacity of Italy to overcome the crisis.

Do you think is it right to work at European level so that also for the health sector is applied an higher transfer of national sovereignty, in order to create a European health system coordinated among the 27 countries?

Yes, I think it is necessary, facing emergencies such as those related to the COVID-19 epidemic and considering what has been realized by EU to strengthen the integration process among Member States (Customs Union, Single Market, Euro), to give up on autonomous health policies and promote health interventions coordinated at European level with more resources at disposal for emergency health actions.

The spread of this epidemic is the clear demonstration of a globalized world in every aspect and not only the economic monetary phenomena can cause, as it has mainly happened in the past, dramatic consequences on the economies of each State.

How do you think markets are reacting to this Coronavirus epidemic?

Markets are showing warning signs for the consequences caused by the virus. We can see the effects in the sell-off dynamics in the main financial centers, but also in the fear of companies forced to reduce the production or to close the business for the shortage in the intermediate good supply useful for the production. Strong signals are needed from public institutions to ensure the availability and the access to essential goods, to support enterprises, operators and families which are worried about their incomes threatened by the crisis, to give confidence to citizens about the availability of financial resources and competences to help the country to win this challenge and to take the road to development.

On 12th March 2020, the President of the European Central Bank, Christine Lagarde, made statements about the relationship between European Economy and Coronavirus. Many experts discussed “a big shock on the growth prospects”; what do you think about it?

The recessive situation European Economies are living because of the Coronavirus induced ECB to introduce important monetary measures to support banks and the real economy, as the government bond purchasing program for a total of 120 billion of Euro in 2020 and the program to support the liquidity and the granting of loans for european families and companies.

No decision has been taken to change the interest rates.

The President Lagard, during her speech, said that Governments and National Political Institutions have to implement proper and coordinated fiscal policies to mitigate the economical impact of the COVID-19 virus, including actions to contain the spread related to government bonds of the most indebted countries.

Stoke markets reacted in a negative way to her harsh words in relation to the “spread topic” and, in fact, the Italian government bond yields increased by 2 percent in the afternoon, generating a strong increase of the cost of debt.

We are at the beginning of a situation where it grows the gap between the euro countries more affected by the virus and those who are the most virtuous one in which the spread of the virus is, at least at the moment, less accentuated. Great firmness and unity of purpose among all the European Institutions, including the ECB and the national governments, are needed to win the challenge against the ongoing pandemic in the EU. It will be necessary to act on reforms of the European Governance and on mechanisms of financial solidarity that could help the most fragile countries to get out of the crisis and to start to grow again.

Published on March 13, 2020 by - a blog written by volunteer students of Sociology of European Integration - discipline taught by Prof. Maria Cristina Marchetti, main coordinator of the Cultural Studies in Business - CSB project - Department of Political Sciences of Sapienza University of Rome.

Interview by Pier Giorgio Serra, Francesco Toma and Dario Zamperin,

Article translated by Ylenia Azzaro, member of the JUMP, organization partner of CSB project.

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