How different sectors of the economy are bearing the brunt of the coronavirus outbreak

The coronavirus outbreak might cost the global economy $1-2 trillion in 2020, according to the UN Conference on Trade and Development. Its potential impact on the Indian economy is not yet known, but several sectors are already feeling the pain, Here’s a look at the sectors most impacted by the outbreak.


585 international flights cancelled by private carriers as on March 6

As part of its efforts to stop the spread of Covid-19, India on March 12 suspended almost all visas for a month, adding to the woes of airlines. As of March 6, Indian private carriers had cancelled 93 international flights and global airlines 492 flights, according to data shared by the government in the Lok Sabha. With the number of Covid-19 cases in India increasing two and a half times over the past week to 84, travellers might be hesitant to even fly within the country.

“There will be a further demand slump in the domestic segment, at least for the next few weeks,” says Kapil Kaul, chief executive for aviation consultancy CAPA India. Indigo, India’s largest airline, has reported a 15-20% decline in daily bookings over the past few days, compared with the week-ago period, and expects its quarterly earnings to be “materially impacted”. Kaul says the impact of coronavirus on airlines will be deeper than epidemics in the past. This crisis comes at a time when airlines are also being hit by a falling rupee. Clearly, airlines have to navigate a lot of turbulence.



35% fall reported in restaurant business

With several companies restricting all but essential travel, business hotels in major cities could be left with a lot of empty rooms. Kapil Chopra, founder and CEO of Postcard Hotels & Resorts, says average occupancy in these hotels could fall from 70-75% to 20%, if they haven’t already, even as demand in holiday destinations continues to be strong.

As people become more cautious, restaurants have reported a decline of 30-35% in business in the past few days. And restaurants at malls have recorded a sharper drop, says Anurag Katriar, president of the National Restaurant Association of India. “Delivery segment is seeing the least impact.”

Multiplexes will also have to contend with a fall in demand. Delhi, Kerala and Jammu & Kashmir have ordered that cinemas be shut till March 31. Maharashtra has also ordered the closure of cinemas in some cities, hurting multiplex chains like PVR Cinemas and Inox Leisure Limited. Movie producers globally and in India have deferred the release of movies such as the latest James Bond franchise, No Time to Die, and Akshay Kumar’s Sooryavanshi.



35% of apparel export orders come from Europe

Raja Shanmugam, an apparel manufacturer in Tirupur, India’s largest textile hub, is a worried man. “There is a fear psychosis because of coronavirus. If this continues for 2-3 weeks, it could be really bad for us.”

India exported over Rs 1 lakh crore of garments in 2018-19, according to the ministry of commerce. Exports bring in 60% of Indian apparel makers’s revenues. Europe alone accounts for a third of India’s garment exports. But with the region being declared the new epicentre for the disease by the World Health Organization, new orders are bound to be affected. “But it is hard to assess the outcome now. We’ll know in the next couple of weeks,” says Shanmugam, who also heads the Tirupur Exporters’ Association.

What is accentuating the apparel industry’s problems is the decline in footfalls at stores, both as a result of people’s reluctance to visit them and the closure of malls.


Consumer Durables and Electronics

15% decline seen in mobile shipments in Jan-March

India’s consumer durables industry is heaving a sigh of relief as factories in China resume operations after Covid-19 cases taper off in the country. But as India grapples with a rising incidence of the disease, visits to stores might dwindle due to a fear of being exposed to the virus in public spaces, says Kamal Nandi, president of the Consumer Electronics and Appliance Manufacturers Association. This would hurt demand. India imports around 45% of its consumer durables from China, according to CRISIL.

India also relies heavily on China for components like compressors for air conditioners and open cell TV panels.

Similarly, mobile handset shipments to India are also likely to be hit by the supply disruption in China. According to Counterpoint Research, there could be a 15% fall in mobile shipments in the January-March quarter, from the corresponding period of 2019, and there could be a similar impact in the next three months.


Poultry and Seafood

30% fall reported in demand for chicken in the past three weeks

With the spread of the coronavirus, it was not surprising to see a spurt in unsubstantiated social media messages on the dos and don’ts. Among these was a warning to stay away from meat, which has driven down demand for chicken, the meat of choice for Indians, by around 30% in the past three weeks, says industry sources. To prevent stock pileup, poultry companies have been forced to sell birds at Rs 25 per kg, a third of the raising cost, says B Soundararajan, chairman of poultry company Suguna Foods. Despite the food safety regulator assuring people that the virus does not spread through poultry, it might take weeks for the Rs 80,000 crore chicken industry to bounce back.

As far as seafood is concerned, India’s worries are more on the export front. Seafood exports brought in Rs 46,600 crore in 2018-19, with the US, European Union and China being the top markets, according to the Marine Products Export Development Authority. Though the number of Covid-19 cases in China has been on the decline, it is not clear if the US and Europe have seen the worst yet. Exporters say demand could be hit.

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