Italy is at risk of recession as virus threatens fragile growth – Bloomberg

The coronavirus risks could have a significant negative impact on the global economy and also on the Italian one,” the country’s Deputy Finance Minister Antonio Misiani said in an interview in Rome Thursday.

Key Quotes:

“It becomes more complicated today to reach the government target of 0.6% growth in the budget law.

The outbreak has come at a difficult time for Italy’s economy. Output unexpectedly shrank 0.3 percentage point in the final quarter of 2019, ramping up pressure on the fragile coalition government of Prime Minister Giuseppe Conte. Bank of Italy Governor Ignazio Visco warned of “significant” downside risks to the country’s outlook.

China is Italy’s third-largest supplier, many Chinese tourists come to Italy” and purchase significant quantities of its luxury goods.

The government would redouble efforts to relaunch growth with income tax reform, carrying out the government’s public investments plan, and quickly helping the companies most exposed to the Chinese market.”

Meanwhile, EUR/USD consolidates the recent declines to a 33-month low of 1.0865, as the US dollar continues to draw bids across the board amid China coronavirus fears-led increased safe-haven demand.