MILFORD, Michigan — Italy, continually posting the European Union’s third-largest economy by GDP, possesses some of the world’s most prominent tourist sites. Naturally, with COVID-19 shutdowns restricting tourist travel for most of 2020, Italy’s economy has suffered.
The Severity of COVID-19 to Italy’s Economy
Italy’s gross domestic product, or GDP, declined by 8.9% as nearly 945,000 people lost their jobs in 2020. During COVID-19, the country’s dependence on tourism proved detrimental. Italy’s decline in GDP was one of the worst in Europe. It is estimated that Italy’s economy lost upward of €36 billion in 2020 with the suspension of international travel. To put this loss in perspective, in 2019, travel and tourism represented just under 3.5 million jobs, or 15% of the total employment, in Italy. The contribution of travel and tourism to the nation’s employment decreased by 9.6% in 2020 to account for 3.1 million people employed in the sector. Therefore, travel and tourism in total decreased from producing 13.1% of Italy’s GDP in 2019 to 7% in 2020.
The Italian National Institute of Statistics (ISTAT) reported that poverty rates in 2020 reached their highest point in the 15 years of recorded statistics. The incidence rate for individuals living in absolute poverty rose from 7.7% in 2019 to 9.4% in 2020. This resulted in an increase of more than one million people living in absolute poverty in 2020, making the total 5.6 million. ISTAT deems absolute poverty as those “unable to buy goods and services essential to avoid grave forms of social exclusion.”
Financial Help from the Government
In the early stages of the pandemic, the Italian government offered €600 per month to help self-employed and part-time workers. According to Statista, an individual in Italy earning less than €657 per month is considered impoverished. Many of the self-employed and young workers employed at non-essential businesses that closed during lockdowns were pushed into what was deemed as Italy’s “new poor.”
Moreover, the distribution of the €600 benefits proved inefficient as the agency’s website became subject to hackers. This initiative also did not account for some 3.5 million undeclared workers working “under the table.” The government later allotted €55 billion to support these workers, but many were reluctant to claim benefits for fear of revealing their illegal work status.
The southern regions of Italy have perennially lagged behind their northern counterparts; the poverty rate in the south was twice the rate of the north before the pandemic began. Lacking the northern industry, the south of Italy is especially reliant on tourism and hospitality for its economic well-being. The mafia is also more potent in the southern regions. Many citizens turned to the mafia as an “alternative to the state” and took loans when the government’s distribution of relief bills was slow and insufficient.
In May 2021, the Italian government approved a €40 billion stimulus package in support of families and businesses deeply affected by COVID-19 restrictions. This includes an allotment of €17 billion to self-employed workers. Additionally, €4 billion goes toward workers in industries most affected by the crisis.
This relief package, coupled with the country reopening to tourists from foreign nations, will inevitably help Italy’s economy gain a resurgence. Minister of Foreign Affairs Luigi Di Maio stated, “tourism is a key part of Italy getting back to normal,” and as parts of the world return to normal, Italy improves as well.
– Paolo Giannandrea