Economy

Coronavirus-led economic slowdown to weigh heavily on several key sectors: Moody’s

Our Bureau Mumbai | Updated on March 17, 2020 Published on March 17, 2020

Coronavirus’s global spread will significantly slow down economic growth, which will, in turn, amplify its financial impact on several key corporate sectors, according to Moody’s Investors Service.

Global travel-related sectors have been hardest hit as coronavirus restricts movement, and disrupts supply chains, said Moody’s in a new global report.

The assessment by Moody’s is based on its baseline scenario, which assumes normalisation of economic activity in the second half of the year, and the ability of some companies to withstand the effects of the virus depending on its duration.

The global credit rating agency’s downside scenario factors in a jump in cases and public fear that the virus will not be contained in the first half of 2020, leading to extensive and prolonged travel restrictions and quarantines, along with a prolonged slump in commodity prices.

“Sectors reliant on trade and the free movement of people are most exposed, such as passenger airlines, shipping, and lodging & leisure, which includes cruise lines and restaurants,” said Benjamin Nelson, a Moody’s Vice-President - Senior Credit Officer and co-author of the report.

The report observed that global automakers are also under great pressure because of their reliance on international supply chains, while gaming and non-food retail in certain regions are also exposed to supply chain disruptions, and the inevitable decline in foot traffic.

“Companies’ ability to withstand the effects of the virus will depend on its duration, and we caution that as events unfold very rapidly on a daily basis, our assessment of exposure will change over time,” said Richard Morawetz, a Moody’s Vice-President - Senior Credit Officer and co-author of the report.

Published on March 17, 2020
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