COVID-19’s impact on industries has varied substantially and will continue to be felt for years in terms of the development outlook, economic policy and credit metrics, S&P Global Ratings mentioned on Monday.
Shifting patterns of work and leisure have accelerated additional although and environmental, social, and governance (ESG) considerations have moved to the foreground, it added.
With the widespread availability of coronavirus vaccines in sight, preparing for post-pandemic enterprise circumstances amongst corporations is taking on higher urgency. For specific sectors like retail, media and entertainment, that indicates tackling secular alterations that have been accelerated (rather than brought on) by the crisis.
S&P mentioned the pandemic has widened the gaps involving regions and industries and inside societies. In the corporate sector, disparities are set to develop involving corporations and industries that advantage from pandemic-accelerated digitalisation and these suffering from structural shifts in working practices and behaviour.
“Even if a vaccine is widely available by mid-year, as we assume in our base case, containment of the pandemic looks to be very uneven worldwide.” The principal danger for the very first half of subsequent year is that more surges of COVID-19 will need renewed lockdowns and jeopardise a fragile financial recovery — major to additional credit deterioration especially in sectors most exposed to social distancing and travel restrictions.
On the vibrant side, mentioned S&P, record low interest prices and abundant liquidity will most likely persist beyond subsequent year, cushioning the effects of the historic surge in leverage that has supported corporations, households and governments via the pandemic.
As the worldwide financial recovery gains a toehold, the dialing back of fiscal assistance, which has each protected the most vulnerable and supplied a bridge to the recovery, will need skillful policymaking. Premature austerity constitutes a important danger in 2021, mentioned S&P.
Even if the worldwide economy gets back on track toward year-finish, with the United States regaining its pre-pandemic GDP level (China has currently recovered in this sense), it is most likely to take till 2022 or later for quite a few of the world’s economies to totally recover.
“The aftermath of the crisis is likely to bring significant challenges for credit. There could be significant aftershocks given the severe economic damage, the dramatic expansion of private and public debt and the roiling of labour markets — undermining business models on which complex debt structures reside.”