Covid-19’s effect on industries has varied dramatically and will continue to be felt for years in the case of the growth outlook, financial policy and credit metrics, S&P Global Ratings said on Monday.
Shifting patterns of work and leisure have accelerated further while and environmental, social, and governance (ESG) considerations have moved to the foreground, it added.
With the widespread availability of coronavirus vaccines in sight, planning for post-pandemic commerce conditions among companies is taking on greater urgency. For sure sectors like retail, media and entertainment, that means tackling secular changes which were accelerated (reasonably than caused) by the crisis.
S&P said the pandemic has widened the gaps between regions and industries and inside societies. In the corporate sector, disparities are set to grow between companies and industries that get pleasure from pandemic-accelerated digitalisation and those suffering from structural shifts in working practices and behaviour.
“Although a vaccine is widely to be had by mid-year, as we imagine in our base case, containment of the pandemic looks to be very uneven worldwide.”
The main risk for the first half of next year is that extra surges of Covid-19 will require renewed lockdowns and jeopardise a delicate economic recovery — leading to further credit deterioration especially in sectors most exposed to social distancing and shuttle restrictions.
On the bright side, said S&P, record low interest rates and abundant liquidity will likely persist beyond next year, cushioning the effects of the historic surge in leverage that has supported companies, households and governments through the pandemic.
As the global economic recovery gains a toehold, the dialing back of fiscal improve, which has both safe the most vulnerable and given a bridge to the recovery, will require skillful policymaking. Untimely austerity constitutes a key risk in 2021, said S&P.
Although the global economy gets back on course toward year-end, with the USA regaining its pre-pandemic GDP level (China has already retrieved in this sense), it is likely to take until 2022 or later for lots of the world’s economies to fully get well.
“The aftermath of the crisis is likely to cause remarkable challenges for credit. There could be remarkable aftershocks provided the severe economic damage, the dramatic expansion of private and public debt and the roiling of labour markets — undermining commerce models on which complex debt structures reside.”
(This story has been published from a wire agency feed without modifications to the text.)
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