Coronavirus to hit movement-driven sectors, disrupt supply chains: 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," said Benjamin Nelson, Vice President - Senior Credit Officer, Moody's, in a statement.

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Global automakers are also under great pressure because of their reliance on international supply chains. On the other hand, gaming and non-food retail companies 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, Vice President - Senior Credit Officer, Moody's.

The agency'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.

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.

(Disclaimer: Additional background information has been added to this PTI copy for context)

(Edited by Saheli Sen Gupta)