Coronavirus to hit movement-driven sectors, disrupt supply chains: Moody's

Topics Coronavirus | Moody's

Moody's Investors Service has said that global spread of new coronavirus (Covid-19) will significantly slow economic growth, which will in turn amplify its financial impact on several key free movement-driven sectors.

"Sectors reliant on trade and the free movement of people are most exposed, such as passenger airlines, shipping, and lodging and leisure, which includes cruise lines and restaurants," Vice President - Senior Credit Officer - Benjamin Nelson at Moody's said in a statement.

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.

 

ALSO READ: Coronavirus LIVE

"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," another Vice President - Senior Credit Officer - at Moody's Richard Morawetz said.

Moody's assessment is based on its baseline scenario, which assumes a normalisation of economic activity in the second half of the year, and the ability of some companies to withstand the effects of the virus will depend on its duration.

The 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.

The number of deaths around the world linked to Covid-19 has topped 7,000, after Italy announced a new surge in fatalities, with over 1,75,000 infections recorded globally so far.

In India, the number of infected cases stood at 125, as per union health ministry log.



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel