Coronavirus impact on industries and sectors
The ongoing spread of COVID-19 “the new coronavirus” has become one of the biggest threats to the global economy and financial markets, in this article, we will explore which are the most impacted industries and why.
1. Travel and tourism
Up to 50 million jobs in the travel and tourism sector are at risk due to the global Covid-19 pandemic, according to the World Travel & Tourism Council (WTTC), and BA is warning that it will cut jobs and ground aircraft.
The latest figures from the WTTC, which represents the global travel and tourism private sector, show that global travel could be adversely impacted by up to 25 percent in 2020.
This is the equivalent to a loss of three months of global travel, which could lead to a corresponding reduction in jobs of between 12 and 14 percent.
2. Manufacturing
The manufacturing sector in China has been hit hard by the virus outbreak. Such a slowdown in Chinese manufacturing has hurt countries with close economic links to China, many of which are Asia Pacific economies such as Vietnam, Singapore, and South Korea.
Factories in China are taking longer than expected to resume operations, several analysts said. That, along with a rapid spread of COVID-19 outside China, means that global manufacturing activity could remain subdued for longer, economists said.
3. Retail (Commodities and services)
The virus outbreak in China has also hit the country’s commodities and services industry as reduced consumer spending hurt retail stores, restaurants, and aviation among others.
China is not the only country where the services sector has weakened. The services sector in the U.S., the world’s largest consumer market, also contracted in February, according to IHS Markit, which compiles the monthly PMI data.
One reason behind the U.S. services contraction was a reduction in “new business from abroad as customers held back from placing orders amid global economic uncertainty and the coronavirus outbreak,” said IHS Markit.
4. Oil and Gas
A reduction in global economic activity has lowered the demand for oil, taking oil prices to multi-year lows. That happened even before a disagreement on production cuts between OPEC and its allies caused the latest plunge in oil prices.
Analysts from Singaporean bank DBS said reduced oil demand from the virus outbreak and an expected increase in supply are a “double whammy” for oil markets.
China, the epicenter of the coronavirus outbreak, is the world’s largest crude oil importer.
“The spread of the virus in Italy and other parts of Europe is particularly worrying and will likely dampen demand in OECD countries as well,” the DBS analysts wrote in a report.
5. Stock market
Stocks have suffered their worst week since the depths of the 2007-08 financial crisis as investors flee for safety. For example, all three major U.S. stock indexes have dropped at least 10 percent from their most recent peaks, abruptly ending a climb to new record highs.
Roughly 55 percent of Americans hold stocks, according to a Gallup poll from September 2019, including through their retirement accounts. A steady stock market rout could also damage broader consumer confidence and had already boosted pressure on the Federal Reserve to cut interest rates.
