The impact of Covid-19 on sectors: the Cerved Industry Forecast
Cerved's updated forecasts estimate 671 billion euros in turnover for the next two years due to the Covid-19 emergency in Italy. Very diversified impacts between sectors: cinema, transport and tourism are the most affected sectors when e-commerce is growing rapidly.
The economic crisis generated by the Covid-19 emergency could inflict serious damage to our economic system and result in heavy losses for Italian companies, penalized by the lockdown and other logistical restrictions linked to the containment of the epidemic and affected by the strong drop in internal and global demand. In the two-year period 2020-21, depending on the different scenarios of persistence of the emergency condition, Italian companies could lose between 509 and 671 billion in turnover. In a context of strong criticality for all the activities of the production system, the effects will be very diversified at a sectoral level, with particularly violent impacts in the transport, cinema and hospitality structures and sectors which will instead benefit from the new scenario such as trade online and the pharmaceutical.
This is the scenario that emerges from the new Cerved Industry Forecast, which updates the forecasts for March taking into account the evolution of the epidemic, the lockdown measures and the various DPCMs and extending the analysis to a more granular level by monitoring the trends of over 1,600 sectors.
In this new edition of the Cerved Industry Forecast, the forecast models used to estimate the impact of Covid-19 on the various sectors of the Italian economy have been updated on the basis of different assumptions compared to the previous version of March. The new scenario hypotheses, in fact, take into account the prolongation of the lockdowns, the problems encountered in the management of the emergency and a reopening phase characterized by strong uncertainties and very differentiated between the sectors. The updated estimates on the impact of Covid therefore converge towards the pessimistic scenario of the Cerved Industry Forecast in March by narrowing the percentage fork between the various hypotheses.
Also, in this edition, predictions have been formulated for two scenarios:
A soft scenario, in which a gradual reopening of the economy is expected from May 2020, albeit in the presence of measures to contain the infections, and the absence of further lockdown periods. In this perspective, a gradual return to normal and a slow and steady recovery of the economic cycle is expected despite the very important impacts of the virus on national demand, value chains and import-export activities.
A hard scenario, in which an emergency situation is expected to persist until the end of 2020, with a restart followed by subsequent lockdown periods. In this perspective, the Italian economy would be even more damaged by the crisis, also due to the strong operational uncertainty that would accentuate the structural limits of the country making the recovery path slow and inconsistent.
In both scenarios, the stability of the financial markets and an economic and monetary policy of full support both on the supply and demand side are expected.
In the soft scenario, Italian companies would lose 12.7% of their revenues in 2020, and then recover in the following year, in which an increase of 11.2% is expected which, however, would not bring turnover to the levels of 2019 (- 2.9%). In the case of prolonged duration of the emergency, the fall in revenues in 2020 would be much more significant (-18.0%), with an even wider gap at the end of the forecast period compared to 2019 (-4.3%).
From a sectoral point of view, although in a generalized context of strong contraction in turnover, the impacts would be highly diversified in the economy. In the hard scenario, the effects of the crisis would be particularly severe for the logistics (-12.7%), non-financial services (-8.4%) and transportation (-8.2%) sectors. The only sectors that recorded positive performances at the end of the forecast period would be the chemical-pharmaceutical sector (+ 7%) and, to a lesser extent, the electrical engineering and IT sector (+ 0.3%). In the soft scenario, the agricultural sector would also report on turnover values higher than 2019 (+ 0.8%).
Analyzing the trends at a greater level of detail, the sector most affected would be that of cinema projection, which would lose 65% in the soft scenario and even 80% in the hypothesis of a prolonged return to normal. The persistence of the emergency situation would lead to a sharp reduction in revenues also in the air transport of passengers (-60.8%), with effects also in the management of airports (-56.7%). The tourism sector is also experiencing serious difficulties, with drops of up to 55% for travel agencies and tour operators and 52.9% for hotels. Another sector for which a strong contraction in turnover is estimated is the restaurant sector, which could burn a third of revenues in a soft scenario and half of revenues in a hard scenario.
Conversely, some sectors could benefit from the emergency following the changes induced by the virus and the lockdown in the habits and preferences of consumers and businesses. In particular, a very significant growth is estimated for online commerce (+ 40% in the hard scenario), which is expanding especially in the food delivery branch. Positive forecasts are also recorded for the sectors most impacted within the value chains of the health emergency, such as the manufacture of artificial respiration devices (16.8%), glass for laboratories, pharmacies and for hygienic use (15 %), the protective clothing and equipment items (14.4%) and manufacturing non-woven fabrics (13.8%). Growth estimates in the next two years also for pharmaceutical specialties (+ 13.5%) and for the food distribution channels characterized by greater proximity, such as supermarkets, discount stores and minimarkets (+ 12.3%).
If yo wish to learn more about the situation in Italy, feel free to download the full study here!