Possible Economic Impact of COVID-19 on Various Sectors

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Let's take a look at the coronavirus and its impact on the economy. 

Moody's put together a heat map of how badly sectors will be hit by the coronavirus outbreak.

In the high exposure category, Moody’s has outlined the automotive and auto suppliers, apparel, consumer durables, gaming, lodging, restaurants, cruise lines, obviously the airlines, transportation and services.

In the moderate exposure category are aerospace & defense, business services, consumer services, consumer non-durables, chemicals, healthcare, manufacturing, mining, non-food retail, oil & gas, tech hardware, and wholesale distribution.

And finally, the sectors with the lowest exposure include construction, food and beverage, IT software and services, packaging, real estate, telecoms and media and waste management.

“We expect global spread of the coronavirus to negatively impact a modest portion of North American corporates under our macroeconomic baseline scenario, but under our downside scenario that would surge to 45% of companies and global recession risks have risen,” wrote Moody's.

Watch the video above for more on the COVID-19 pandemic. 

Video Transcript:

Good afternoon, it’s Tuesday March 17.

The market is rebounding from its worst day since 1987.

Let’s take a look at some of the top stories driving the markets on Tuesday.

This afternoon, I’m focusing on the coronavirus and the impact it’s having on our economy.

First, let’s review the cases.

There are over 190,000 cases, with 7,500 deaths. And 80,000 people have recovered from the virus.

Outside of China, the hardest hit country is Italy, with over 27,000 cases. Then there’s Iran, Spain, German, South Korea and France.

The United States has 5,200 cases.

In a press conference Tuesday, the Treasury Secretary Steven Mnuchin said that the administration is seeking to send cash payments directly to Americans.

Residents in San Francisco has been ordered to confine themselves to their homes as much as possible. There are over seven million residents in the Bay Area.

President Trump has asked that people work from home if possible and warned against gatherings of over 10 people.

New Jersey residents are facing a curfew from 8 PM to 5 AM and New York City is also reportedly considering a curfew.

Moody’s released a note Tuesday saying that it expects the coronavirus to negatively impact a modest proportion of North American corporations under their baseline scenario. However, under their downside scenario, 45% of companies would be impacted and the risks for a global recession have risen.

They published a heat map of the sectors that would be hurt by the coronavirus.

In the high exposure category, Moody’s has outlined the automotive and auto suppliers, apparel, consumer durables, gaming, lodging, restaurants, cruise lines, obviously the airlines, transportation and services.

Moody’s says that the sectors in the high exposure category are considered immediately vulnerable to credit negative effects under the baseline scenario.

Moderate exposure will show some resilience, but would be hurt more significantly, obviously, under the downside scenario.

So let’s talk about the downside scenario that’s been laid out by Moody’s.

“Some advanced economies, including the US, would experience a short-duration technical recession with contraction for a couple

of quarters before rebounding. Monetary and fiscal stimulus would prove insufficient to support the economy in this scenario,” they wrote.

It’s important to note that Moody’s did slash its outlook for airlines to negative back on March 6. They note that airlines will be under pressure throughout 2020, which is why the sector has fallen into the high exposure category.

Here at TheStreet, we’re breaking down everything you need to know about the coronavirus and its economic and market impacts, so stick with us for the latest. 

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