Italy just locked down the world's eighth biggest economy. A deep recession looms.

Jack Allen-Reynolds, senior Europe economist at Capital Economics, said Italy’s economy will contract sharply in the first half of the year even if the restrictions are lifted at the end of April, with GDP declining about 2% for all of 2020.

The hit to GDP will be “much bigger” if the restrictions are extended until the end of June, he added.

“This does not take account of the impact on the banking sector … the spillovers from the impact of the virus on other parts of the eurozone, or the potential supply-chain disruption if the virus really takes off in Germany and other key trade partners,” he added.

Economists at Goldman Sachs expect the restrictions to shave 1.5 percentage points off Italian economic growth in both the first and second quarters of the year, followed by a pickup during the second half.