Italy Puts 60 Million on Lockdown As Coronavirus Rips Through Europe's Third-Largest Economy

"Stay at home", Prime Minister Giuseppe Conte told Italians as he unveiled unprecedented restrictions in 60 million citizens in Europe's third-largest economy.

Italy has banned all public gatherings, while placing more than 60 million people under strict travel conditions, in an unprecedented lockdown designed to tame the rapid spread of the coronavirus across Europe's third largest economy.

The measures, announced late Monday by Prime Minister Giuseppe Conte, include school and university closures that will last until at least April 3, restrictions on travel in and out of the country, a ban on public gatherings and the suspension of sporting events including professional soccer matches. 

“I am going to sign a decree that can be summarised as follows: I stay at home,” Conte said during a televised address last night. "The whole of Italy will become a protected zone. There is no more time. I will take responsibility for these measures. Our future is in our hands.” 

Italy's benchmark FTSE MIB stock index, which had fallen nearly 25% from its February 19 peak to yesterday closing levels, was marked 3.75% higher in early Tuesday trading, while 10-year Italian government bond yields fell 11 basis points to 1.29%, narrowing the spread between triple-A rated German bunds to around 2%. 

Italy has been one of the worst-hit countries outside of China amid the ongoing coronavirus pandemic, with infections rising from 3 to just over 9,100 in less than a month. With 463 deaths and the fastest rate of increase in Europe, Italy has struggled to contain the virus as it spreads to nearby France, Germany and Switzerland. 

British Airways said Tuesday it would suspend all flights in and out of Italy during the government lockdown, while American Airlines  (AAL) - Get Report said it would cancel its Philadelphia-to-Rome service through the end of April. 

Government officials, meanwhile, said they would suspend mortgage payments for struggling borrowers amid the ongoing crisis, but t (hat might not be enough to repair the economic damage the outbreak has wrought, however, given it was teetering on the edge of recession prior to the outbreak.) - Get Report

"The economic picture has clearly changed since then, with concerns about the possible economic consequences inflated by the regional distribution of the infection, concentrated in rich Northern regions of Lombardy (accounting for 22% of national GDP), Emilia Romagna (accounting for 9% of GDP) and Veneto (9% of national GDP)," said ING's senior economist Paolo Pizzoli.

"We think economic weakness will continue in 1Q20, and Italy is likely to fall into a technical recession and think this will first show up in consumption and in export data, partially compensated by poor imports and by some emergency money," he added.