Entertainment, tourism to take severe hit even after resumption of biz activity

Even after business activity resumes in a couple of months, assuming the Covid-19 pandemic subsides, some sectors like entertainment, tourism, hospitality, electronics, retail, gems and jewellery and logistics are likely to take a big hit, with recovery possible only in the medium to long term.

According to an analysis by Dun & Bradstreet, entertainment will see a severe impact and recovery could only be seen in the long term as the biggest concern is the likely continuation of social distancing measures to avoid the risk of any relapses. The revenues from advertisements will be dependent on revival of the aggregate demand in the economy.

The Dun & Bradstreet assumes that the Covid-19 pandemic subsides in India from its peak level and all businesses resume operations from June 2020 onwards, although in a staggered manner, and businesses across the globe (excluding China) also resume operations from the same time, in a staggered manner.

Tourism will also take a severe hit with long term recovery even when the travel bans are lifted, as both foreign tourist arrivals and domestic tourist movements are expected to remain very low because of heightened risk aversion, and measures related to social distancing and lower disposable incomes, according to the analysis by Dun & Bradstreet.

Hospitality is in the same category as the slowdown in the tourism sector will have knock-on effects on hospitality. Occupancy rates may remain very low until Q1 2021. In an effort to increase and improve the bottom lines, many businesses are expected to cut down travel and accommodation costs for their employees.

The logistics sector will also see a severe impact with recovery in the medium term as the slowdown in the tourism sector will have knock-on effects on passenger traffic. Heightened risk aversion will prolong the recovery.

Cargo traffic is expected to pick up once businesses start resuming operations across all countries. However, low consumption expenditure will delay the recovery.

Electronics will also see a high impact and recovery in long term, as demand for white goods and other high-end consumer durables will remain impaired as consumers are expected to postpone their purchases because of lower disposable income, and uncertainty over growth prospects.

About 50-60 per cent of the products and 70-80 per cent of the components are imported, and a shortage of components of electronic goods from China is likely to keep prices higher and hence will impact demand.