Lockdown and quarantine measures taken by many countries in response to the global pandemic have had an impact on the agriculture industry. In particular, this can be seen in transport issues and in a squeeze on the availability of foreign seasonal workers. Looking forward, agriculture industry trends include the tightening of environmental regulations (especially in Europe), adverse weather conditions (these often hit emerging economies the hardest) and low sales prices due to pressure from processors and retailers.
The global automotive market was already suffering from deteriorating sales for passenger cars and commercial vehicles when COVID-19 struck. Additionally automotive sector margins are under pressure from the need for increased investment to address the shift away from combustion engines in favour of e-mobility. This has led to a subdued automotive industry outlook. Payment delays and insolvencies are expected to increase in the coming 12 months, especially among smaller tier 2 and tier 3 suppliers.
Chemicals / Pharmaceuticals industries
The chemicals/pharmaceuticals markets are currently fairly resilient compared to other sectors. However they are not entirely immune to the pressures facing related industries. For example, petrochemicals are susceptible to oil price volatility and some parts of the industry are experiencing a decrease in demand from key buyer sectors such as automotive and construction. In the most part, however, the chemicals/pharmaceuticals industry outlook is fairly bright, with pharmaceuticals businesses expected to benefit from rising health expenses in the coming years. This is a result of increasingly aged populations in developed countries, a growth in individuals’ affluence and access to healthcare in emerging economies and the pandemic itself, which is leading to rising health expenses.
Construction / Construction materials industries
Sector performance of the construction industry is highly cyclical and often varies from country to country. In many markets the sector is characterised by a high volume of smaller players and fierce competition, particularly at the lower end of the value chain. In general there is a higher level of insolvencies compared to other sectors and, with tight operating margins, there is an increased credit risk across the industry especially with smaller operators. The construction and construction materials outlook is poor in most countries around the world. This is due to the pandemic lockdowns and recession leading to supply chain problems, postponement of projects and reduced order volumes.
Consumer durables industry
Digital transformation has posed a major challenge for the consumer durables sector even before the issues caused by the COVID-19 pandemic. Brick and mortar retailers, in particular, were struggling with increased competition from online sellers, high operating costs and decreased turnover. The stay at home orders and lockdowns during the pandemic have exacerbated the situation, resulting in an increase in online sales and significant drop-off in sales from physical stores. The consumer durables industry forecast predicts an exodus of retailers from the market over the coming few years, especially among smaller players.
Electronics / ICT industry
The outlook for the electronics/ICT industry is varied. Some parts of the electronics/ICT sector have benefitted from opportunities presented by the COVID-19 pandemic, where other businesses have struggled with limitations and issues caused by the pandemic response and recession. Overall the long-term future looks promising. However, that said, ongoing US-China trade tensions may present problems and the prospect of an escalation of a US-China trade war over high-tech equipment is a downside risk.
Financial services industry
The financial services sector remains relatively robust in most countries. However, the economic downturn following the global pandemic has caused an increase in financial troubles for both businesses and consumers. This, in turn, is likely to lead to more loan defaults for banks and tighter lending conditions imposed by organisations across the financial services industry.
The food industry faces fierce competition and price wars in many food retail markets. This impacts producers and suppliers, who can struggle with tight margins and passing on costs. Food industry trends reveal a sector undergoing a period of upheaval. Much of the industry, especially in developed economies, is affected by changes in consumer behaviour, with increasing numbers choosing healthy options.
Machines / Engineering industry
The machines/engineering sector is heavily dependent on the economic wellbeing of the key buyer industries, especially agriculture, construction and automotive. All of these have been experiencing some financial stress in recent months, which in turn will impact on the machines/engineering sector outlook for the coming months. The picture is not uniform across markets. For example, the automotive sector in Italy, Germany and China has suffered more recently than in other parts of Europe.
Metals / Steel industries
The main characteristics affecting the metals/steel industries include a subdued global demand and a complex market picture that features overcapacity and strong competition. Pressure on margins has increased due to competition, high iron ore prices and, in some markets including Europe, demands from environmental issues. At a time where many businesses are already operating with low profitability, the metals/steel industries outlook could feature payment delays and insolvencies in many markets over the coming months.
Paper producers and the packaging segment of the paper industry have been impacted by both the recent COVID-19 lockdown measures and also the decline in demand from ongoing digitalisation. The latter is a trend that has been ongoing for years. Despite many consumers turning to online shopping during lockdowns, overall the value-added of the paper industry is expected to contract in most markets in 2020.
The retail, hospitality and travel segments of the services industry have been hit particularly hard by COVID-19 lockdown and quarantine measures throughout the world. A drastic reduction in international travel has impacted airlines, airports, travel agencies and tour operators, as well as hotels, cultural events, fairs and exhibitions. In many countries, lockdown included the shutting of bars and restaurants. Government support packages for lost earnings vary between countries and the current services industry trends indicate rising business closures and insolvencies.
Producers, wholesalers and retailers in the textiles industry were experiencing an economic squeeze from fierce competition and thin margins even before COVID-19 spread across the world. This is especially true for brick and mortar retailers suffering from rising online competition. In addition to these challenges, pandemic lockdowns caused physical stores to close for several months in many countries, resulting in deteriorating sales figures for the textiles market. What’s more, the large technical textiles segment has also been negatively affected by decreasing demand from key buyers, such as the automotive sector.