Italy’s health ministry had confirmed a total of 229 cases of the virus by Monday evening, and reported seven deaths.
At least 11 towns in the two most-affected regions – Lombardy and Veneto – have been placed under lockdown, while authorities have closed schools and museums and scrapped sporting and cultural events.
The Italian economy – the third-largest in the eurozone – was already concerning before drastic isolation measures took effect, and it must now contend with plunging stock prices in Milan, cancelled events and threats to tourism.
Italy’s economy has been the most sluggish in the 19-nation bloc since the start of monetary union.
It shrank by 9 per cent in the wake of the 2008 global financial crisis and has recovered only about half of that since then.
In 2019, Italy registered the EU’s lowest growth rate at a mere 0.2 per cent.
The government had been forecasting growth of 0.6 per cent in 2020, but that was before the coronavirus hit.
Lombardy, home to the financial capital Milan, and Veneto account for around a third of Italian GDP and half its exports.
The Milan stock market suffered heavy losses on Monday and was down by 6 per cent in afternoon trades, heading for its worst day since 2016.
Hardest hit were companies at risk from an expected spending slump such as motorway retailer Autogrill, which shed 12.5 per cent, and luxury brand Ferragamo, which was down 9.3 per cent.
Milan Fashion Week, which ended on Sunday, saw a 50-per cent drop in Asian buyers and safety measures led to two shows – including Italian designer Giorgio Armani’s – taking place behind closed doors and without an audience.
Italy’s fashion industry accounts for 5 per cent of the country’s GDP.
Several big trade fairs have been cancelled or postponed amid the outbreak, including the Mido eyewear show and the Milan Furniture Fair, scheduled for April 21 to 26.
Italian event industry association Federcongressi&eventi has warned that businesses in the sector in the Lombardy, Veneto and Emilia-Romagna regions could lose more than €1.5 billion in the space of a month.
The hospitality and tourism industries are in danger as well.
Italy is the world’s fifth most visited country, according to United Nations data, and tourism contributes about 13 per cent to GDP, according to the World Trade and Tourism Council.
Foreign visitors accounted for about €42 billion of spending in the country in 2018, according to calculations by the Bank of Italy.
Major cities such as Milan and Venice have already been swamped by cancellations in restaurants, hotels and at tourist sites.
The epidemic and measures to contain it “are having a very big impact on the service sector”, according to Luca Paolozzi of the REF research institute, who said restaurants and bars in the Lombardy region are being shut from 6:00 pm to 6:00 am, when they usually get the most business.
“Since the service sector was allowing the Italian economy to keep its head above water, it is quite probable that we will see GDP shrink in the first quarter of 2020, but also the second,” he added.
The head of Confcommercio for Milan and surrounding towns said the 6:00 pm closing time imposed on bars, restaurants and entertainment activities would cut turnover by up to 20 per cent.
Meanwhile, concerns over the virus and quarantine measures have prompted panic-buying with images shared on social media showing various supermarkets in the north with empty shelves.
Italian daily Il Corriere della Sera reported on Monday that latex gloves, hand disinfectant gel and bleach products were in short supply as residents sought to protect themselves from the infection.
