A prolonged economic shutdown to contain the coronavirus or a return to lockdown in economies already opening up could result in a disproportionate hit to the economic and credit risks and could affect the survival of a large number of companies, according to S&P Global Ratings.
A drawn-out crisis might also reignite asset price swings and funding pressures, particularly for more vulnerable speculative-grade debt issuers already facing constrained access to finance, S&P said in a report released on Sunday. Changes in consumer habits affecting demand in certain industries, potential acceleration in “secular trends” and disruption to global supply chains could also shape the landscape of industry performance heading into next year.
“In addition to the uncertainty on the timing of recovery, until a vaccine is found, the level and path of economic growth in a post-coronavirus world is subject to lots of uncertainties,” S&P global head of research, Alexandra Dimitrijevic, said. “The potential damage to the fabric of the economy relating to employment, capital, and productivity will be a key determinant.”
The lockdowns have pushed the global economy into the deepest recession since the Great Depression, and is set to shrink 3 per cent in 2020, according to the International Monetary Fund. The bleak forecast from the Washington-based lender is more than a 6 percentage point revision, relative to its October 2019 estimates and updated January 2020 projections of a 3.3 per cent expansion in global gross domestic product.
The outlook, according to the IMF, is worse than the 2008 financial crisis and the lender does not expect recovery to take place before 2021.
S&P has a slightly more optimistic view about the global economy with a 2.3 per cent contraction forecast this year, a sharp downward revision from its 0.4 per cent economic expansion projection in March.
Governments and central banks across the globe have poured more than $8 trillion (Dh29.4tn) into the global economy to ensure financial stability, protect the corporate sector and support smaller businesses. However, the number of job losses is on the rise as the lockdowns remain in effect in large parts of Asia, Europe and North America. Some countries in Europe, the Middle East and Asia have now started easing restrictions, partially opening up their economies.
The pandemic has infected 2.89 million people globally and fatalities have topped 203,000 as of Sunday. More than 822,000 people have recovered, according to Johns Hopkins University, which is tracking the spread of the disease.
“Except for China, which suffered most in the first quarter, many major economies would be hit worst in April-June,” Ms Dimitrijevic said. “We anticipate the recovery through the second half of the year to be slow before gathering strength into 2021. However, the resulting 5.8 per cent global growth rate we see in 2021, driven by a rebound of demand, would be insufficient to recover lost output.”
Unlike the global financial crisis, the corporate sector is getting hit first this time, with certain industries choked by interruption of their activities. The sudden stop has forced corporates to increase debt levels to survive, rather than focus on deleveraging that would be more typical in a normal cyclical downturn.
The services sector, rather than manufacturing, has taken a harder hit by social-distancing measures, as reflected in purchasing managers indexes. The historic collapse in oil prices has also amplified the effect on some corporates. The banking sector, securitisations, and some sovereigns are also not immune to these negative developments.
“As we entered the crisis with a record level of credits rated ‘B’ and below, this will likely push the speculative-grade default rate above 10 per cent,” S&P noted.
Although economic forecasts continue to worsen, financing conditions have been gradually improving, particularly after the US Federal Reserve’s historic liquidity facilities, introduced on March 23, and expanded on April 9. The lifting of some social-distancing measures in China, alongside central bank support, appears to be improving lending trends there, pushing March corporate bond issuance to an all-time monthly high.
“Still, we see more-restrictive lending conditions amid the material contraction in economic activity from global containment measures,” S&P said. “Thus far, borrowers with stronger credit quality have been able to largely resume issuing debt, while funding costs remain prohibitively high for weaker borrowers in an environment of collapsing revenues.”
After a decade of tighter regulations around the world, banks have entered this crisis with much stronger balance sheets than they had at the onset of the global financial crisis. Capital and liquidity levels will provide material buffers for large banks in advanced economies to cushion the blow from this downturn.
However, once the dust settles and economies bounce back, the earnings recovery for banks is unlikely to be as sharp as the GDP rebound, according to S&P.
Abu Dhabi Sustainability Week
Read more about the coronavirus
UAE currency: the story behind the money in your pockets
Suggested picnic spots
Abu Dhabi
Umm Al Emarat Park
Yas Gateway Park
Delma Park
Al Bateen beach
Saadiyaat beach
The Corniche
Zayed Sports City
Dubai
Kite Beach
Zabeel Park
Al Nahda Pond Park
Mushrif Park
Safa Park
Al Mamzar Beach Park
Al Qudrah Lakes
The specs
Engine: Two permanent-magnet synchronous AC motors
Transmission: two-speed
Power: 671hp
Torque: 849Nm
Range: 456km
Price: from Dh437,900
On sale: now
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
DUBAI%20BLING%3A%20EPISODE%201
%3Cp%3E%3Cstrong%3ECreator%3A%20%3C%2Fstrong%3ENetflix%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EKris%20Fade%2C%20Ebraheem%20Al%20Samadi%2C%20Zeina%20Khoury%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%202%2F5%3C%2Fp%3E%0A
The biog
From: Upper Egypt
Age: 78
Family: a daughter in Egypt; a son in Dubai and his wife, Nabila
Favourite Abu Dhabi activity: walking near to Emirates Palace
Favourite building in Abu Dhabi: Emirates Palace
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
Infiniti QX80 specs
Engine: twin-turbocharged 3.5-liter V6
Power: 450hp
Torque: 700Nm
Price: From Dh450,000, Autograph model from Dh510,000
Available: Now
Mohammed bin Zayed Majlis
KILLING OF QASSEM SULEIMANI
More from Neighbourhood Watch
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
Mohammed bin Zayed Majlis
KILLING OF QASSEM SULEIMANI
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Killing of Qassem Suleimani
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
The years Ramadan fell in May
More from Neighbourhood Watch:
More on animal trafficking
More from Rashmee Roshan Lall
Zayed Sustainability Prize
The years Ramadan fell in May
Killing of Qassem Suleimani
The five pillars of Islam
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Killing of Qassem Suleimani
How much of your income do you need to save?
The more you save, the sooner you can retire. Tuan Phan, a board member of SimplyFI.com, says if you save just 5 per cent of your salary, you can expect to work for another 66 years before you are able to retire without too large a drop in income.
In other words, you will not save enough to retire comfortably. If you save 15 per cent, you can forward to another 43 working years. Up that to 40 per cent of your income, and your remaining working life drops to just 22 years. (see table)
Obviously, this is only a rough guide. How much you save will depend on variables, not least your salary and how much you already have in your pension pot. But it shows what you need to do to achieve financial independence.
UAE currency: the story behind the money in your pockets
The five pillars of Islam
Why are asylum seekers being housed in hotels?
The number of asylum applications in the UK has reached a new record high, driven by those illegally entering the country in small boats crossing the English Channel.
A total of 111,084 people applied for asylum in the UK in the year to June 2025, the highest number for any 12-month period since current records began in 2001.
Asylum seekers and their families can be housed in temporary accommodation while their claim is assessed.
The Home Office provides the accommodation, meaning asylum seekers cannot choose where they live.
When there is not enough housing, the Home Office can move people to hotels or large sites like former military bases.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
EPL's youngest
- Ethan Nwaneri (Arsenal)
15 years, 181 days old
- Max Dowman (Arsenal)
15 years, 235 days old
- Jeremy Monga (Leicester)
15 years, 271 days old
- Harvey Elliott (Fulham)
16 years, 30 days old
- Matthew Briggs (Fulham)
16 years, 68 days old
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
More on Quran memorisation:
Herc's Adventures
Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
More coverage from the Future Forum
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
More on animal trafficking
Killing of Qassem Suleimani
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
