Wednesday, 28 September 2022

Global travel-related sectors hardest hit as coronavirus restricts movement, disrupts supply chains

Coronavirus's global spread will significantly slow economic growth, which will in turn amplify its financial impact on several key corporate sectors, Moody's Investors Service said in a new global report published on 17 March.

"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 senior credit officer Benjamin Nelson who co-authored the report.

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 senior credit officer Richard Morawetz, who is also a co-author of the report.

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. Moody'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.

Re-disseminated by The Asian Banker

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