Coronavirus outbreak in China: Risks of supply chain disruption increase with time
- The official PMIs for January released today do not yet reflect the magnitude of the economic concerns around the ongoing coronavirus 2019-nCoV outbreak in China. However, we think that its impact on the Chinese economy and the rest of the world is not negligible.
- The hit to China’s GDP y/y growth could amount to c. 1pp, mostly over Q1 2020. A recovery should thereafter be possible, based on pent-up production and policy support.
- A protracted pause in Chinese activity could be disruptive for certain supply chains such as chemicals, transport equiment, textile and electronics.
- The top five economies potentially hit by this disruption are Taiwan, South Korea, the Netherlands, Hungary and Indonesia.
Brexit: A UK-EU trade deal is unlikely in 2020
- Brexit day arrives on 31 January, kickstarting the transition period during which the EU’s free movement of capital, goods, people and services will continue to apply.
- A trade deal agreement with the EU by June 2020 seems unlikely, paving the way for a longer transition period.
- In our view, the risk of “no trade deal” at end-2020 now has a 15% probability, against 30% back in 2019. To this regard, 2020 already appears to be pivotal.
Zistite viac - https://www.eulerhermes.com/en_global/economic-research/news/brexit-a-uk-eu-trade-deal-is-unlikely-in-2020.html
Global Automotive 2020: Another lost year
- Today's financial release from Tesla Inc, the U.S. manufacturer of electric vehicles (EVs), is a perfect reminder of two key challenges facing the automotive industry in the short-term: boosting sales of alternatively powered vehicles (APVs), notably EVs, to compensate for the decline in traditional powertrains and limiting the decline in profitability to preserve the capacity to invest in the future of automotive. To this regard, 2020 already appears to be pivotal.
- The rise in APVs is not yet strong enough to support a rebound of the global automotive market in 2020. We expect the latter to experience another decline in volume terms in 2020 (-1%) after a noticeable contraction in 2019 (-4%).
- What does this mean for companies? Increased price competition and downside pressure on margins, which will push down the combined EBITDA of the top 25 automotive manufacturers (-11% in 2019 and -3% in 2020) in an environment of low revenue growth (+1%).
Zistite viac - https://www.eulerhermes.com/en_global/economic-research/news/global-automotive-2020-another-lost-year.html