S&P says negative shock from coronavirus temporary

Independent credit rating agency Standard and Poors (S&P) said it expects the negative shock from the novel coronavirus, though severe, to be temporary.

The S&P said it expects the effects to be offset by a recovery starting in the last quarter of the year.

As the spread of the new coronavirus continues, uncertainty remains high regarding how long it will last. “Modelling by academics with expertise in epidemiology indicates a likely range for the peak between late February and June. When assessing the possible impact on sovereign ratings, we’re working with the assumption that the spread of the disease will peak sometime in March and things will start to improve after,” S&P said in its latest release Friday (Feb 14).

It said the main impact is being felt throughout Asia-Pacific, where the agency has lowered economic forecasts for 2020 across most sovereigns territories that it rates. S&P added: “The outbreak has immediate negative implications for China’s economic growth and fiscal performance. Consumer spending is taking a hit as people avoid crowded places such as restaurants and shopping malls.”

The agency said this is exacerbated by government actions to restrict people movement in a bid to prevent further spread of the disease. “These restrictions are not only dampening consumption further, but production activities are also affected by workers unable to go to their workplaces,” S&P said.

As of today, 1,384 people have died so far from the coronavirus COVID-19 outbreak.