The coronavirus outbreak in China will hit sales and profits in food-related industries such as retail and entertainment for “several months”, a wide-ranging report from Moody’s has warned.
In a study that both underlined the short-term impact the virus will have on Chinese consumption and downplayed longer-term effects, Moody’s said the coronavirus will have a “greater economic impact” than the SARS outbreak of 2002-2003.
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The study said there will be a “marked drop” in sales and profits across China as spending in key sectors including transportation, retail, tourism and entertainment lowers.
Meanwhile, the country’s wider economy will amplify the impact of the current virus, which so far has killed more than 400 people in China, compared to when SARS first appeared.
“When compared to the 2003 SARS outbreak – also part of the coronavirus family – the now much-increased contribution of consumer demand as a driver of growth means the coronavirus outbreak could have a greater economic impact than in 2003,” said Martin Petch, a Moody’s senior credit officer.
The Moody’s long-term view was more optimistic, however, with the credit rating agency noting that China’s financial authorities will flex their fiscal muscle to mitigate the overall impact of the outbreak. On Monday, China’s central bank injected RMB1.2tn (US$173bn) into the financial markets and lowered selected interest rates.
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By GlobalData“[China has] the financial means to absorb the economic and fiscal shock [of the virus],” Moody’s said.
