COVID-19 Impacts - Italy
Three examples that can provide a measured outlook on the economy in Italy as it is beginning to recover from COVID-19 include orders in the fashion retail sector rising by 18% since 28 March, after recording a 40% drop in the previous two months of the COVID-19 pandemic. Searches and bookings for travel to Italy have also started to grow, with an increase in year-over-year bookings of 149%. Detailed information is below.
The Retail Industry
- According to 365Retail, the Italian fashion retail sector is reporting a slow but steady recovery as the COVID-19 crisis starts to slow down. This is after recording a 40% drop in e-commerce orders for Italian brands in the last two months of the COVID-19 pandemic. The fashion and accessories segment also saw its revenue drop by 26%.
- However, since 28th March of this year, orders have steadily climbed by 18% and revenue has increased by 13%. Luxury items such as trainers, handbags, sportswear, and gloves are currently experiencing a rise in sales and the trend seems to be happening globally.
- According to the senior vice president of verticals at Emarsys, Alex Timlin, Italy leads the world in fashion and the COVID-19 pandemic has hit the sector hard because of lockdowns. However, he adds that consumer confidence has started to grow and the fashion retail sector has started to see a steady recovery.
- Timlin notes that brands that only sold items in-store responded to COVID-19 by also switching to online selling and this has resulted in e-commerce orders increasing again. He states that if the trend continues, it could positively impact the Italian economy.
- The sector still has a long way to go before it can register a full recovery, with Fashion Network reporting that online orders for fashion and accessories in Italy lagged behind those of the UK, US, and France.
The Travel Industry
- Accord to Sojern, which has access to real-time data on travel trends, inbound travel intent to Italy has begun to show signs of recovery in the third and fourth quarter of 2020. Data that Sojern collected on April 6, 2020, indicates that travel searches to Italy rapidly declined in March, falling to -82.1%, while bookings to the country rapidly declined in March, falling to -95% on 22 March, as shown in the searches and bookings graphs.
- However, in the past few weeks, searches and bookings for travel to Italy, although still low, have started to grow, starting in the fourth quarter, from as early as October. Flight searches to Italy are up, including an increase of 144.7% for January 2021.
- Italy as a destination, one of those to experience a devastating impact of COVID-19, has started to see an increase in "year-over-year bookings of 149%, by February 2021." The country has always been a popular destination for travelers from other countries and signs of an intent to travel to the country are returning "as early as November 2020 and continuing well into 2021. The intent is currently strongest from Eastern and Western Europe and from the Middle East."
- Although outbound travel from Italy has been low due to the COVID-19 pandemic, data from Sojern shows that intent to travel from Italy has increased in the third quarter of 2020 and is growing evenly into 2021.
- Currently, Italian travelers are showing the biggest interest to travel to Spain, France, and the UK. Travel searches from the country to France in February 2021 have risen almost 600% year-over-year, increased 773% to the United Kingdom, and are up 489% to Spain. This is a positive trend especially if the searches translate into bookings and could help the economy start to recover.
The Financial Industry
- According to Bloomberg, business investment in Italy has fallen by over 10% and the economy is on its way to a 6% contraction in 2020. In response, the Italian government has released around 50 billion euros or $55 billion to aid the economy. This will add to what the government has already borrowed, which is equivalent to 135% of GDP.
- As new COVID-19 infections and deaths continue to slow down, the Italian government is allowing some businesses to re-open to kick-start economic recovery. The government has also announced a $435 billion package mostly to be given to businesses to help sustain the economy. The plan ensures that $217 billion is used to guarantee liquidity to companies, and another $217 is earmarked to sustain foreign trade.
- According to the Italian minister of economy and finance, Roberto Gualtieri, this economic intervention has started to counter the economic impact of the COVID-19 pandemic and is helping the country start getting back up.
- The Italian government also enacted the "Restore Liquidity" law on 8 April 2020 that is already providing businesses affected by the COVID-19 crisis with financial assistance to help stay afloat and weather the short term effects of COVID-19.