Italy's economy could shrink by 6% in 2020, business lobby says

In this photo, a man walks in an empty Vittorio Emanuele II gallery shopping arcade, in downtown Milan, Italy, Sunday, March 22, 2020. (AP Photo)

The Italian economy is on course to shrink by a record 6% this year as a result of the novel coronavirus pandemic, the country's main business lobby, Confindustria, said Tuesday.

"Never in the history of the republic did we find ourselves facing a health, social and economic crisis of this scale," Confindustria said in its economic forecast report.

A 6% annual drop in gross domestic product (GDP) would be the biggest year-on-year fall for Italy since the foundation of its republic in 1946.

The estimate is based on assumptions that the "acute phase of the health emergency" will end in May, with a gradual resumption of economic activities, Confindustria said.

Italy is facing the biggest coronavirus outbreak in Europe, and the deadliest in the world. As of Monday, it had reported more than 100,000 infections and 11,591 deaths.

The country has been under lockdown for most of March, with schools and most shops and factories closed, and people ordered to stay home except for work or urgent needs like buying food and medicine.

Confindustria called for major stimulus action from both Italian and European Union authorities to cushion the impact of the recession, including eurozone debt issuances, or eurobonds.

It said it is proposing, along with German and French business lobbies BDI and MEDEF, an extraordinary EU public investment plan of 3 trillion euros ($3.3 trillion).

This would boost growth by 2.5 percentage points in Italy and by 1.9 percentage points in the eurozone during a three-year period, according to Confindustria.

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