Economy Coronavirus: a first assessment of the most affected economic...

Coronavirus: a first assessment of the most affected economic sectors

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Posted Feb 23 2020 at 3:21 p.m.Updated Feb 23. 2020 at 5:01 p.m.

· Uncertainty in the automobile

In the automotive industry, no executive has yet ventured to assess the impact of the virus on results. Daimler, for example, – which makes 30% of its sales of
Mercedes

    in China – said in its annual report on Friday that the fall in growth linked to the coronavirus was likely to affect sales, but also production and the supply chain – without giving further details.

Most factories outside Hubei Province are slowly restarting – or will do so. But not before March 11 in the quarantined province, which concentrates 7% of the country’s production. General Motors, Honda and Nissan will remain closed at least until then. Many suppliers are located there, which could lead to production lines around the world, like the factories of Jaguar Land Rover in the United Kingdom. Car sales in China plummeted 92% in a fortnight in February. The country represents 40% of sales of General Motors and Volkswagen, and 30% of those of Daimler and BMW.

· The price of oil starts to fall again

After a few days of rebound, the
crude prices

    went back down below the 58 dollar mark in the face of fears over Chinese demand. UBS experts are now expecting crude oil to average $ 56 in the first quarter, $ 6 less than initially expected. OPEC and Russia meet on March 5 to decide to cut production to support prices.

· Anxiety in the maritime transport of goods

Sea freight transport is going through a rough patch. For dry bulk (ores, coal, cereals, etc.), the Baltic Dry Index, the daily price index for the twenty transport routes representative of the market, hit a low last week since 2016.

The coronavirus thus led “At a complete stop of many Chinese ports”, Lars Bastian Østereng, in charge of research at Arctic Securities, told AFP.
Louis Dreyfus Armateurs (LDA)

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    has suspended crew relief in China and no longer allows its sailors to go ashore. “The epidemic is a very serious phenomenon for the market”, LDA secretary general Antoine Person told AFP.

In container shipping, the Danish AP Moeller-Maersk, the world number one, warned Thursday that the start of the year was “weak” due to a longer than usual closure of factories in China. For 2020, visibility, crucial for the sector, is considerably reduced.

· Heavy slate for air transport

Coronavirus epidemic could cause airlines $ 30 billion shortfall in 2020, according to the International Air Transport Association (Iata), which fears the “First global drop” reservations since 2008-2009. Asia-Pacific companies would be the first to be affected, with an overall loss of revenue of $ 27.8 billion, with the shortfall for the others being $ 1.5 billion. The Chinese air group HNA, already facing an over-indebtedness problem, could be taken over by the government of Hainan province – where it has its headquarters -, which would dismantle it.

2020 “Will be a very difficult year for airlines”, warned Thursday the general manager of Iata, Alexandre de Juniac. According to the association, which brings together 290 airlines, the net drop in the number of passengers could be 8.2% in the Asia-Pacific region this year. Air France-KLM estimated between 150 and 200 million euros the shortfall due to the suspension of its flights until April.

· French tourism hard hit

In the hotel industry, the British heavyweight InterContinental Hotels Group (IHG) and the French champion Accor have just indicated that the consequences of Covid-19 are, at this stage, limited. “Greater China” represents less than 10% of operating profit for the former, according to IHG managing director Keith Barr and 3% of Accor’s turnover, said Accor’s CEO, Sébastien Bazin

Conversely, the French tourism sector, primarily Parisian, is and will be affected by the collapse of the arrival of Chinese visitors (2.2 million in 2018), especially since they are by far the most foreign visitors spenders. According to the tax refund specialist Planet, the Chinese represented 32.1% of the amount of zero-rated sales in 2019, with an average basket of 1,452.20 euros.

Among tour operators, specialists from Asia and China are the most exposed. Among French professionals, who suspended departures from China on January 26 until March 31, the fall in bookings is increasing in Thailand and Vietnam, Japan is now the third country to be strongly affected.

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