Deloitte Economics' Coronavirus Impact Monitor - Increased concerns of a second wave of infections as economies begin reopening
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Deloitte Economics’ Coronavirus Impact Monitor Increased concerns of a second wave of infections as economies begin reopening 8th edition, 11 May 2020
Coronavirus outbreak
The number of new daily confirmed cases is slowing in Denmark and in Europe as
countries begin to take steps to reopen their societies and economies
Confirmed COVID-19 cases: World and Denmark
• Between 1 February 2020 and 10 May 2020, the 3.9
4.0 11,000
number of global confirmed COVID-19 cases rose from As of
# confirmed cases in Denmark
10,000
# confirmed cases globally
3.5 10 May 2020
9,800 to about 3.9 million. 9,000
10,319
3.0 8,000
• As the number of new cases in Europe show signs of
7,000
(millions)
2.5
falling, countries are beginning to take steps to reopen
6,000
their societies and economies. The Danish government 2.0
5,000
has activated Phase II of the reopening to take effect 1.5 4,000
from 18 May 2020. 1.0 3,000
2,000
• In Denmark, the increase in the number of confirmed 0.5
1,000
cases has remained relatively low. As of 10 May 2020, 0.0 0
there were 10,319 confirmed cases. 24 Feb 2 Mar 9 Mar 16 Mar 23 Mar 30 Mar 6 Apr 13 Apr 20 Apr 27 Apr 4 May 11 May
Denmark (RHS) World (LHS)
• The bottom chart shows the daily number of deaths in 7-day rolling average confirmed daily COVID-19 deaths:
World, US and Denmark
the world, the United States and Denmark. There are
World US Denmark
currently around 4,000-5,000 daily deaths in the 7,000 2,200 18
world, lower than the 6,000-7,000 peak in mid-April. 2,000 16
6,000
1,800
• In Denmark, the 7-day average daily death rate has 14
5,000 1,600
been falling since its peak at the beginning of April 12
1,400
# Daily deaths
2020. 4,000 1,200 10
• In Denmark, there were 40 patients in intensive care 1,000 8
3,000
800
as of 10 May 2020, of which 33 patients were in 6
2,000 600
respirators. This number has fallen steadily since the 4
400
peak at around 100-150 at the beginning of April 1,000
2
200
2020. The Danish Health Authority has ~925 0
0 0
respirators available for COVID-19 patients. 1 Mar 1 Apr 1 May 1 Jun 1 Mar 1 Apr 1 May 1 Jun 1 Mar 1 Apr 1 May 1 Jun
Source: World Health Organisation (WHO), The Danish Health Authority (Sundhedsstyrelsen)
Coronavirus Impact Monitor – 11 May 2020 Page 2 Deloitte Economics © 2020
Impact on financial markets
COVID-19 impact on equity markets has been most severe on the transport and energy
sectors, while medical and pharmaceutical stocks have largely recovered
Equity markets: Sectoral indices in Europe1
• The outlook for increased public expenditure and central
bank interventions to ease liquidity strains has Major outbreak in Europe
supported markets.
110
• European equity indices suffered material losses
100
(2 Jan 2020 = 100)
following the COVID-19 outbreak in Europe, but have to
Sectoral indices
some extent recovered from the bottom reached in mid- 90
March 2020. 80
• The Transport industry in particular, including airlines, 70
continues to be severely affected by the virus and 60
related travel restrictions. The Refinitiv Europe Transport
50
Price Index has been down by some 39% since the end
40
of January 2020, driven by a material decline in 30Dec
30 Dec19 13 Jan 27 Jan 10 Feb 24 Feb 9 Mar 23 Mar 6 Apr 20 Apr 4 May 18 May
volumes.
Transport Energy Medical & Pharmaceuticals Financial Technology
• The European energy sector, including oil and gas
Interest rates: 10Y Interest rate (swap)
companies, has lost more than 32% since the end of
and 6M interest rates (CIBOR)
January 2020. Declining energy prices have applied
0.4
downward pressure on energy equities.
0.3
• Financials, including banks, have also experienced value 0.2
destruction. Market concerns about increased credit
0.1
% rates
losses and funding squeezes are likely drivers.
0.0
• Danish short-term rates have risen to ~0% on the -0.1
(0.1)
outlook for increased central bank interventions. After a (0.2)
-0.2
sharp increase in March 2020, longer-term rates have
(0.3)
-0.3
fallen back.
(0.4)
-0.4
• Equity market volatility and implied default probabilities 30 Dec 19 13 Jan 27 Jan 10 Feb 24 Feb 9 Mar 23 Mar 6 Apr 20 Apr 4 May 18 May
remain elevated, ref. page 26 in the appendix. 10Y DKK Swap rates 6M CIBOR
Note: 1) Refinitiv European sectoral price indices measured by Refinitiv (Thomson Reuters)
Source: Thomson Reuters Eikon
Coronavirus Impact Monitor – 11 May 2020 Page 3 Deloitte Economics © 2020
Economic Outlook: IMF and Deloitte survey
Q1 GDP contracted sharply across Europe and US
• The “sudden stop” in the global economy, caused by the COVID-19 Economic growth projections
pandemic, has translated into significant downward revisions of 5.8% 6.0%
4.7%
economic growth projections worldwide. According to IMF’s latest 3.4%
predictions: 1.9%
1.4%
− The global economy is expected to contract by 3.0% in 2020
instead of the initially estimated 3.4% growth. This 3.0%
contraction in global GDP is much worse than the 0.1%
(3.0% )
contraction experienced during the 2009 financial crisis, ref.
page 23 in the appendix.
(6.5% )
− Danish GDP is projected to contract by 6.5% in 2020 (7.5% )
World Eurozone Denmark
compared to the pre-COVID-19 growth estimate of 1.9%. GDP
in Denmark shrank by 4.9% in 2009. The median forecast of
2020 forecast Revised 2020 forecast Revised 2021 forecast
Danish 2020 GDP growth is -4.7% according to our survey of pre COVID-19 post-COVID-19 post-COVID-19
professional forecasters, ref. page 24 in the appendix.
• Consistent with this, the eurozone economy contracted by 3.8% in Deloitte survey1: When do you think activity will rebound
in your economy?
Q1 according to preliminary estimates from Eurostat. The French
and Spanish economies shrank by 5.8% and 5.2%, respectively, in
Q1, a sign of the extensive havoc caused by measures imposed to 83%
77%
72%
curb the coronavirus’ spread. In the United States, GDP shrank at 64% 62%
67% 63%
60% 59%
an annualised rate of 4.8% in Q1. 2021
• Deloitte’s latest survey among ~ 2,000 colleagues and clients from
2020
all over the world on 7 May 2020 reveals that the majority of 40%
36% 39% 41% 37%
33%
participants continues to expect an economic rebound first in 28%
23%
17%
2021. This appears to be aligned with IMF’s expectations of a 2021
12 Mar 19 Mar 26 Mar 2 Apr 9 Apr 16 Apr 23 Apr 30 Apr 7 May
rebound.
Note: 1) Deloitte surveys conducted on 12, 19, 26 March, 2, 9, 16, 23, 30 April and 7 May 2020, involving about 2,000 colleagues and clients.
Source: Deloitte surveys, IMF World Economic outlook (October 2019) for pre-COVID-19 figures; IMF World Economic Outlook (April 2020) for revised forecasts
Coronavirus Impact Monitor – 11 May 2020 Page 4 Deloitte Economics © 2020UK CFO survey results
UK CFOs’ corporate priorities have become defensive and their business optimism fell
sharply in Q1 2020
Corporate priorities: % of CFOs who rated the following as a strong priority for
• Deloitte is surveying CFOs of the UK’s largest businesses their business over the next 12 months
quarterly1:
Reducing costs 76%
50%
Increasing cash flow 68%
− CFOs are placing more focus on defensive strategies 45%
Reducing leverage 41%
than at any time since we began asking the question 19%
Introducing new products/services 22%
in 2010 as they face the huge economic shock or expanding into new markets 36%
wrought by COVID-19. Disposing of assets 17%
13%
6%
Expanding by acquisition 17%
− Defensive strategies – reducing costs, increasing Increasing capital 2%
expenditure 12%
cash flow and reducing leverage – remain the top Raising dividends or 0%
share buybacks 8%
priorities for CFOs, but their focus on these
2020 Q1 2019 Q4
strategies has sharpened significantly compared to
the previous quarter. Business optimism: Net balance of CFOs who are more optimistic about the
financial prospects for their business than three months ago
− The COVID-19 shock triggered the largest decrease 44% 45%
35%
in business confidence in the 12-year history of the
survey (not shown), taking it to its lowest ever level.
− 83% of CFOs are somewhat or significantly less
optimistic than three months ago.
(45%)
(59%)
(70%)
(77%)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1
Note: 1) This 51st quarterly survey took place between 8-22 April 2020 and 104 CFOs participated, including the CFOs of 23 FTSE-100 companies and the CFOs of 34 FTSE-250 companies
Source: Deloitte UK CFO Survey
Coronavirus Impact Monitor – 11 May 2020 Page 5 Deloitte Economics © 2020Government support
Massive state aid packages are launched to counter economic fallout from COVID-19
• The various lock-down measures in response to COVID- State aid packages relative to GDP
19 have halted economic activity in certain sectors and
harshly disrupted others. The resulting job losses and Austria 10%
bankruptcies are likely to crate major economic strains Canada 6%
for millions in Europe and worldwide. China 1%
• Gigantic state aid packages have been launched across Denmark 4% 13% 17%
the world to counter the impact of the economic crisis. EU 4%
• EU finance ministers agreed on a EUR540bn (3.5% of EU Finland 8%
GDP) emergency support package for countries hit by France 17%
the coronavirus. The measures aim to provide safety Germany 22%
nets for workers, businesses and sovereigns. Greece 5%
• As these state aid packages are launched, governments Italy 21%
sharply increase debts to finance the increased spending Japan 20%
levels. On this background, the questions about the
New Zealand 4%
following issues have started start to emerge:
Norway 7% 3% 10%
− the sustainability of government debt funding, and Portugal 4%
Spain 9%
− impact on inflation from sharp increases in
Sweden 2% 10% 12%
government spending.
Switzerland 6%
The Netherlands 2%
UK 21%
USA 13%
Credit Fiscal
In some countries, including Denmark, the aid packages also include credit measures like state-guaranteed loans.
Sources: Danske Bank, Deloitte Covid-19 portal as of 5 May 2020
Coronavirus Impact Monitor – 11 May 2020 Page 6 Deloitte Economics © 2020Coronavirus heatmap
Deloitte Economics’ view on the short-term outlook across selected sectors in Denmark
Consumer
Denmark
• Consumers’ lack of spending impacts retail while tourism is kept
down by restrictions. Sector
Energy & Resources Short-term Outlook
• Coronavirus impacts short-term prices, but prices are expected to
rebound in 2021.
Financial Services
Consumer High impact Slow recovery
• The anticipated recession related to the Coronavirus will have a
large impact on the sector.
Industrials
Energy & Resources High impact Moderate recovery
• The European auto industry has experienced a production loss of
~2.2 million vehicles.
Life Science & Health Care (LSHC)
• Swift recovery of LSHC sector with listed companies trading above Financial Services High impact Moderate recovery
pre-corona levels.
Real Estate
• The full impact of COVID-19 is yet to be seen. Industrials High impact Moderate recovery
Technology, Media & Telco (TMT)
• TMT sectors have shown relative resilience to COVID-19 as the Life Science &
world has gone digital. Neutral/Low impact Growth opportunities
Health Care
Transport
• Transport industry experienced sharp decline in activity – equity
market pricing a recovery. Real Estate High impact Moderate recovery
We refer to pages 10-18 for in-depth coverage of developments Technology,
in the sectors above Moderate impact Moderate recovery
Media & Telco
Transport High impact Slow recovery
Source: Deloitte analysis, Dansk Erhverv
Coronavirus Impact Monitor – 11 May 2020 Page 7 Deloitte Economics © 2020Key messages
Economic activity has slowly begun to rebound, but the outlook remains dark
• In Denmark, the increase in the number of confirmed cases seems to be slowing. As of 10 May 2020 there were 10,319 confirmed cases. The reopening
of the society has not been accompanied by a significant increase in confirmed cases.
• The COVID-19 crisis has caused dramatic supply and demand shocks in the world economy, and these shocks are inevitably causing major disruptions
to trade. Global trade volumes are depressed, and the transport sector is facing significant uncertainty.
• Q1 GDP contracted sharply across Europe and US and the unemployment rates have sky-rocketed. More than 30 million Americans have claimed
unemployment insurance since mid-March 2020 pushing unemployment to levels not observed since the Great Depression. Projections of GDP growth
rates reveals a significant contraction of the world economy in 2020.
• Governments all over the world have introduced major aid packages, which, including credit measures, amount to two-digit percentages of GDP.
• The COVID-19 crisis is entering into a new phase as lockdown restrictions are being lifted in most Western countries. Restrictions on the Danish
economy are gradually being lifted. Schools, day care institutions and certain liberal professions have been opened for a couple of weeks. Today the
retail sector and malls reopen as the second phase begins.
• As economies start to open up, concerns arise around a second wave of infections. In Germany, health authorities estimated during the weekend that
the so-called reproduction rate had increased to 1.1 after being 0.65 on Wednesday. The rise comes after easing restrictions. A number above 1 means
that the virus is increasing again as opposed to dying out. China and South Korea have seen an increase in new cases over the weekend. Countries incl.
India, Russia, Brazil Mexico and Nigeria and South Africa are still struggling to reach a peak in new infections.
• Deloitte Economics will continue monitoring the impact of the coronavirus in Denmark and globally. Find our updates here
For questions on the contents of this report, please contact:
Majbritt Skov Tinus Bang Christensen Peter Lildholdt
Director, Head of Deloitte Economics Partner Assistant Director
Mobile: +45 30 93 54 71 Mobile: +45 30 93 44 63 Mobile: +45 40 35 25 36
maskov@deloitte.dk tbchristensen@deloitte.dk plildholdt@deloitte.dk
Disclaimer: The information in this document is intended for knowledge sharing only.
Coronavirus Impact Monitor – 11 May 2020 Page 8 Deloitte Economics © 2020Industry outlook
Consumer Page 10
Energy & Resources Page 11
Financial Services Page 12
Industrials Page 13
Life Science & Health Care Page 14
Public Page 15
Real Estate Page 16
Technology, Media & Telco (TMT) Page 17
Transport Page 18
Coronavirus Impact Monitor – 11 May 2020 Page 9 Deloitte Economics © 2020Energy & Financial Life Science
Consumer Industrials Public Real Estate TMT Transport
Resources Services & Health Care
Industry outlook: Consumer
Consumers’ lack of spending impacts retail while tourism is kept down by restrictions
Highlights from the industry (as of 6 May)
110.0 Based on top 10 Consumers’ financial concerns keeps confidence down
105.0 companies
− 31% of consumers are concerned about making upcoming payments
100.0 while 47% are delaying large purchases.
Indexed share price
95.0 93.4
91.7 − Employment fear fuels worry regarding financial situation with 41% of
90.0
85.0 85.1 consumers concerned about losing their jobs.
80.0 80.0 − Consumers expect to spend more on groceries and household goods
75.0 over the next four weeks.
70.0
65.0
Recovery of tourism remains uncertain
60.0
26 Dec 19 26 Jan 20 26 Feb 20 26 Mar 20 26 Apr 20 − 100% of global travel destinations have restrictions making tourism
1 2 3
Retail Hospitality Consumer MSCI World one of the most affected sectors by COVID-19.
− Updated EU estimates expects revenue to drop 50% for hotels and
Retail index has moved from index 95.3 to 93.4. restaurants, 70% for tour operators and 90% for cruises and airlines.
Hospitality index has moved from index 84.1 to 80.0. − Current EU tourism industry, which employs 27 million people directly
Consumer index has moved from index 94.4 to 91.7. and indirectly, is estimated to be losing 1bn EUR per month.
Trading multiples and economic outlook (as of 6 May)
Index: MSCI World Retailing Index (top 10 companies) As of March 2020, the consumer confidence index4 was 99.93 indicating a
Historical averages Coronavirus impact
(EV/FY0 EBITDA) (EV/FY0 EBITDA) slightly doubtful attitude towards the future economic development, possibly
-3.8x resulting in higher savings and less consumption among consumers.
13.1x 13.8x 17.0x 101 9 9 .9 3
11.6x 13.2x
99
97
10y avg. 5y avg. 3y avg. Jan 1, 2020 Current Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18 Mar-20
Consumer confidence index
Note: 1) MSCI World Retailing Index; 2) MSCI World Consumer Services Index; 3) MSCI Consumer Staples Index; 4) Based on OECD – Europe region
Sources: Capital IQ; MSCI; European Parliament; Deloitte State of the Consumer Tracker
Coronavirus impact monitor – 11 May 2020 Page 10 Deloitte Economics © 2020Energy & Financial Life Science
Consumer Industrials Public Real Estate TMT Transport
Resources Services & Health Care
Industry outlook: Energy & Resources
Coronavirus impacts short-term prices but prices are expected to rebound in 2021
Highlights from the industry (as of 11 May)
110 Hydropower generation
100 − Prior to the corona crisis, electricity prices were already pressured in
90 the Nordics due to a warm winter, which increased the generation
80
capacity of Norwegian hydropower plants.
70
60
− Further, the mild winter decreased demand for electricity.
50
40 Lockdown affects demand
30
− The coronavirus lockdown has negatively impacted the demand of
20
1 Jan 20 1 Feb 20 1 Mar 20 1 Apr 20 1 May 20 1 Jun 20 both public institutions, private individuals and corporations.
Natural gas TTF, spot Coal API2, spot Nordic electricity future, Q3-20
Carbon market prices
The mild winter put pressure on Nordic electricity prices prior to corona crisis. − Lower emissions of CO2 and other greenhouse gasses has led to a
decrease in carbon prices.
Electricity demand has decreased marginally due to coronavirus lockdown.
− Coal becomes cheaper, lowering overall prices, as coal is marginally
Significant drop in carbon emissions, resulting in lower prices.
price setting. This creates a self-enforcing effect, which drives down
prices even further.
Economic outlook
Selected futures
As the effects described above are temporary, and are the result of the
-39.1% -30.5%
-63.3% -21.2% current lockdowns and restrictions on travel, we expect an increase in
35 33 prices once the restrictions are lifted.
26 22 23 25 19
9 Although the short-term impact on electricity producers are significant we
expect prices to rebound in 2021. This is supported by significantly larger
Nordic power, Q3-20 Nordic power, Q4-20 Nordic power, FY-21 EUA, Jun-20 price drops in electricity futures prices in the short-term compared to the
long-term
Jan 1, 2020 May 8, 2020
Source: Thomson Reuters Eikon
Coronavirus impact monitor – 11 May 2020 Page 11 Deloitte Economics © 2020Energy & Financial Life Science
Consumer Industrials Public Real Estate TMT Transport
Resources Services & Health Care
Industry outlook: Financial Services
The anticipated recession will have a large impact on the sector
Highlights from the industry (as of 7 May)
120 Banks and consumer finance
110 − As a result of the GFC, capital levels and controls are more robust reducing
100 the impact of the impending recession. However, IFRS 9 will result in an
[84.9] increase in provisions for macroeconomic assumptions, loan forbearance
90
[79.9] and default payments.
80 [76,9] − Due to Government schemes, ramifications of loan performance may not be
70 [76.8]
felt until post summer.
60
[55.7]
50
Insurance
40 [43.4]
− Claims volume and handling expenses are likely to impact profitability for
30
insurers, albeit claims have reduced for some lines (eg Motor).
1/9/20 1/24/20 2/10/20 2/25/20 3/11/20 3/26/20 4/14/20 4/28/20
1
Banking Insurance European AM
Asset Managers
Consumer Finance DCA MSCI World
− AuM has reduced especially for funds with a high equity to fixed income
The impact of decreasing bank base rates, a fear of an increase in customer asset ratio which will negatively impact profitability. Risk exists around any
defaults, and turmoil in the equity markets has negatively impacted valuation in the guaranteed pension schemes.
first quarter of 2020. Q1 results will provide further details. − Opportunities may exist for those who can successfully deploy a non-
contact distribution network.
The slow re-opening of European countries has provided optimism to the markets,
but the risk of the crisis drawing out increases the likelihood of market corrections.
Trading multiples and economic outlook
Index: S&P Capital IQ Some of the economic issues will play out over the coming months. In
Market capitalization (1 Jan = index 100) Coronavirus impact (P/BV) 3 particular, the recovery of forborne loans following the re-commencement of
trading and the implications of claims experience for insurers.
Nordic Insurers 80 -0.5x
There is a likelihood of some market consolidation certainly in the banking
Nordic Banks 77 1.7x sector where smaller lenders have higher cost-to-income ratios and suffer
Nordic Consumer 1.2x from increases in provisions. In addition, asset managers who have suffered
56
Finance from revenue falls as a result of the decrease in AuM. A measured response
Nordic DCAs 2 43 to trading conditions is important for each FS sub-sector.
European AM 77
Jan 1, 2020 Current
28-04-2020
Note: 1) Indices are from Stoxx Europe 600 Financial Services and MSCI World 2) DCA: Debt Collection Agencies 3) P/BV is measured as average of Nordic Insurers, banks, and DCA
Source S&P Capital IQ
Coronavirus impact monitor – 11 May 2020 Page 12 Deloitte Economics © 2020Energy & Financial Life Science
Consumer Industrials Public Real Estate TMT Transport
Resources Services & Health Care
Industry outlook: Industrials
The European auto industry has experienced a production loss of ~2.2 million vehicles
Share price development year-to-date COVID-19 has significantly impacted European auto industry
110 Country Production lost1,2 Downtime1 Employees affected3
100 Germany 602,973 29 working days 568,518
92.4
90 Spain 410,796 31 working days 60,000
85.1
84.3 France 255,674 32 working days 90,000
80
70 69.3
The UK 188,894 32 working days 65,455
60 Czech Republic 143,981 25 working days 45,000
50 Total EU + UK 2,195,430 28 working days 1,138,536
1 Jan 20 1 Feb 20 1 Mar 20 1 Apr 20 1 May 20 1 Jun 20
COVID-19 has resulted in closed factories in the EU and the United Kingdom,
Industrials Materials Automotive MSCI World leading to a production loss of ~2.2 million motor vehicles, affecting more than 1.1
million manufacturing workers.
Especially industrial companies’ share prices have realised a minor set-back during Factories in the EU and the United Kingdom have on average been closed for 28
the last week – down by ~5%. working days.
Share prices have primarily been driven by earnings report and President Trump’s There are positive signals for the industry, as several car manufacturers, including
threats to relight the trade war between the United States and China. Volkswagen Group, have restarted production at certain factories across Europe.
Trading multiples
MSCI World Industrials Index MSCI World Materials Index MSCI World Automotive Index
Historical averages Coronavirus impact Historical averages Coronavirus impact Historical averages Coronavirus impact
(EV/EBITDA) (EV/EBITDA) (EV/EBITDA) (EV/EBITDA) (EV/EBITDA) (EV/EBITDA)
-2.0x +1.3x -1.3x
13.1x 14.2x 13.8x 10.3x 11.5x 11.7x 11.8x 13.1x 10.2x 9.8x 9.9x 11.1x 9.8x
11.6x 11.8x
10y avg. 5y avg. 3y avg. Jan 1, 20 Current 10y avg. 5y avg. 3y avg. Jan 1, 20 Current 10y avg. 5y avg. 3y avg. Jan 1, 20 Current
Note: 1) Data as of 7 May 2020; 2) Passenger cars, trucks, vans, buses, and coaches; 3) Data as of 20 April 2020 covering employees directly employed by car, truck, van and bus manufacturers
Source: Capital IQ; MSCI World Indices; European Automobile Manufacturers Association; Reuters
Coronavirus impact monitor – 11 May 2020 Page 13 Deloitte Economics © 2020Energy & Financial Life Science
Consumer Industrials Public Real Estate TMT Transport
Resources Services & Health Care
Industry outlook: Life Science and Health Cre (LSHC)
Swift recovery of LSHC sector with listed companies trading above pre-corona levels
Highlights from the industry (as of 6 May)
Indexed share price development
110 Collaboration is the new normal
105
103.6 − COVID-19 has further accelerated an ongoing trend of collaboration
100 99.2 among LSHC companies, scientists, and public institutions.
95
90 − Examples of recent private collaborations are:
85.1
85 − Bavarian Nordic and AdaptVac for COVID-19 vaccine.
80
− Consortium of 15 large life science companies, including Novartis,
75
Johnson & Johnson, and Pfizer, to share knowledge
70
65
60 Race for COVID-19 vaccine or other treatment
22 Dec 19 22 Jan 20 22 Feb 20 22 Mar 20 22 Apr 20 − The antiviral, Remdesivir, has shown promising results in preliminary
1 2
Healthcare Life science MSCI World
trials with improved recovery time and potential survival benefits.
Significant recovery in both Health Care and Life Science in recent weeks continues. − Race for developing a vaccine is still ongoing with a horizon of 12-18
Life Science trade above pre-corona levels. months.
Significantly faster recovery and better performance among Life Science and Health − According to Milken Institute, 123 candidate vaccines and 203 different
Care companies compared to the general market. treatment variations are being developed as of 7 May 2020.
Trading multiples and economic outlook
Index: MSCI World Health Care Index
Historical averages (EV/EBITDA FY0) Coronavirus impact (EV/EBITDA FY0)
LSHC companies trade above pre-corona levels.
0.0x Countries are reopening, and many health care systems are again
13.7x 14.1x focusing on other illnesses and treatments than COVID-19.
11.7x 14.2x 14.2x
Rapid recovery expected for LSHC companies unrelated to COVID-19
treatments as demand for non-essential medications and equipment rises.
10y avg. 5y avg. 3y avg. Jan 1, 2020 Current Continued high demand for COVID-19 related therapies and equipment.
Note: 1) MSCI World Health Care Index (top 10 constituents), 2) MSCI World Pharmaceuticals, Biotechnology and Life Sciences Index (top 10 constituents)
Sources: Milken Institute, Deloitte Health Forward Blog, Capital IQ, NIH
Coronavirus impact monitor – 11 May 2020 Page 14 Deloitte Economics © 2020Energy & Financial Life Science
Consumer Industrials Public Real Estate TMT Transport
Resources Services & Health Care
Industry outlook: Public
The reopening of society has intensified
Highlights from the industry (as of 11 May)
A timeline for COVID-19 government response The recover phase has begun
− Government’s focus is now to move society towards normality and at
the same time avoid an increase in the reproduction rate.
− Top economists have contributed with recommendations about how to
reopen the economy in the most cost-effective way.
− Priority is to increase testing. 11 new test centres opened in the end
of April.
Back to normal
− The government has begun to reopen society. Day care institutions
and schools and many liberal professions have reopened in phase 1.
In phase 2, starting from today, the retail sector and malls are allowed
to open. Also, the restrictions considering social distancing are eased.
Implementation of aid packages
− Provision of emergency financial support for individuals and
businesses is a new and large assignment in the economic ministries.
Economic outlook
Aid packages and focus on supporting the private sector through earlier start-up of planned investment and prepayment of suppliers are expected to ease the negative
impact on the economy.
The severe and long-lasting financial and economic impacts of the pandemic depend on the effects of the aid packages and the strategy for the reopening of society.
Aid packages may challenge government spending in the long term.
Digitalisation in the public sector may be boosted as the crisis has reinforced virtual ways of working.
Source: Deloitte Insights, Government’s response to COVID-19. From pandemic crisis to a better future, April 2020
Coronavirus impact monitor – 11 May 2020 Page 15 Deloitte Economics © 2020Energy & Financial Life Science
Consumer Industrials Public Real Estate TMT Transport
Resources Services & Health Care
Industry outlook: Real Estate
Why can't the financial markets see the mess of the real economy?
Highlights from the industry (as of 11 May)
110 2.0% Retail
100 1.8% − We believe there is a long-term impact on retail with accelerated shift
to online trade. As such new occupiers and business models need to be
(2 J an 2 0 2 0 = 1 0 0 )
Stoc k pric e index
90 1.5% developed by landlords
I nterest rate
80 1.3% − Despite the reopening of many cafés and restaurants, there will only
be capacity for a limited number of guest. Creativity is required
70 1.0% − At some point the government can no more support the hospitality and
leisure sector, which will have significant impact for both landlords and
60 0.8%
tenants.
50 0.5% • Residential
01 Jan 15 Jan 29 Jan 12 Feb 26 Feb 11 Mar 25 Mar 08 Apr 22 Apr − According to FB Gruppen the demand for project housing is down by
STOXX 600 Real Estate Index Danish long-term mortgage rates 20% and the main reason is the financial institutions tightening the
Real estate share prices are still to recover fully. However, interest rates decrease financing terms as explained in a previous version of our Corona
slightly, perhaps fuelled by renewed appetite from investors. Monitor
We still believe that the full impact of COVID-19 is yet to be seen. Despite kick-off − In a brand new forecast from Nybolig, prices on residentials will fall by
of the reopening phase in most countries, support from banks and aid packages are 3-6% in 2020. Not until end of 2022 will we reach pre-covid prices
still essential. But at some point that will have to end... again
Trading multiples and economic outlook
Index: Custom weighted average index1
Historical averages (EV/EBITDA) Coronavirus impact (EV/EBITDA) We still expect a significant reduction in M&A activity for all asset classes, except
-1.6x logistics (positive effect). No changes to outlook from last week.
27.6x 25.4x
28.6x 30.6x 29.0x Currently, price multiples are not impacted from COVID-19 significantly but forced
transactions due to liquidity will probably be at lower multiples.
As of the last couple of weeks, we expect decreasing prices but even lower
10y avg. 5y avg. 3y avg. 1 Jan 2020 Current multiples as short-term income will be impacted severely, despite the current
optimism in the financial markets
Note: 1) Based on Collier International, Patrizia AG, Agate Ejendomme, Jeudan A/S, and Park Street Nordicom
Source: Finans Danmark, Thomson Reuters Eikon, Capital IQ
Coronavirus impact monitor – 11 May 2020 Page 16 Deloitte Economics © 2020Energy & Financial Life Science
Consumer Industrials Public Real Estate TMT Transport
Resources Services & Health Care
Industry outlook: TMT
TMT sectors have shown relative resilient to COVID-19 as the world have gone digital
Highlights from the industry (as of 7 May)
120 TMT perceived as a defensive sector, which has less to lose from COVID-19
110
106
106 Telecom: Spend among consumers is often within a contract; demand is
100
98 up; need is not discretionary (new cars) or constrained (leisure).
90
85
Media & Entertainment: The financial impact varies across sub-sectors.
80
Media consumption up (e.g., Netflix, Disney+), but willingness/ability to
70 pay may be constrained as the economic outlook exacerbates. Events
60 (consumer, business) mostly heavily restricted. Cinemas, theatres,
1 Jan 20 1 Feb 20 1 Mar 20 1 Apr 20 1 May 20 museums mostly closed. TV and movie production mostly halted. Theme
Information Technology1 Communication Services Media and Entertainment MSCI World
parks mostly closed.
TMT companies are trading above the overall equity market. Technology: Some segments (e.g., robotics, communication software)
see record demand; digital transformation being accelerated; companies
Media and Entertainment quickly recovered after the shockwave on the stock
catering to SMEs may suffer from customer liquidity.
market – as people stay home, the entertainment market are making records2
Trading multiples and economic outlook
Index: MSCI World Information Technology
Historical averages (EV/EBITDA) Coronavirus impact (EV/EBITDA)
Forrester has revised its IT spending forecast downward with a best case
scenario where the global tech market growth slowing to ~2% in 2020.
-2.0x
24.0x If a full-fledged recession hits, there is a 50% probability that global tech
21.1x 28.0x 26.0x
16.1x markets will decline by 2% or more in 2020.
Software spending is the subsector expected to show highest growth,
while computer equipment and IT consulting and systems integration
10y avg. 5y avg. 3y avg. Jan 1, 2020 Current
services spending are expected to show weaker growth.
Note: 1) MSCI World industry indices used, 01-01-2020 = index 100, 2) In EMEA and selected Asian countries physical games sales are up 63% according to GamesIndustry.biz
Source: S&P Capital IQ (April 2020), Forrester Research (March 2020)
Coronavirus impact monitor – 11 May 2020 Page 17 Deloitte Economics © 2020Energy & Financial Life Science
Consumer Industrials Public Real Estate TMT Transport
Resources Services & Health Care
Industry outlook: Transport
Transport industry experienced sharp decline in activity – equity market pricing a recovery
Highlights from the industry (as of 29 April)
Transportation stocks indicate belief in the market’s recovery
120
115 − The rapid spread of COVID-19 has had a major impact on global goods
110
105 transport, with ripple effects from the shortfall in demand for goods
100 from China.
95 93.0
90 91.1 − The recent surge in stock prices since the low point in mid-March 2020
85 84.9 indicates an expectation for a recovering demand global trade.
80
75
70 Accelerated conversion to e-commerce to aid in recovery
65
60 − As of mid-April 2020, US retailers’ online YoY revenue growth was
Apr 19 Jun 19 Aug 19 Sep 19 Nov 19 Jan 20 Feb 20 Apr 20 68%, substantiated by 146% YoY growth in the number of online
retail orders.
MSCI World MSCI Transportation Danish Transportation Index
− A big rush on freight capacity and the subsequent increase in freight
rates are expected, as demand recovers and companies are trying to
Transportation indices have largely followed the total market. get their products on the water.
Transport companies have picked up pace from the recent correction, much due to − This could entail space and capacity constraints for shippers, resulting
the accelerated conversion from brick-and-mortar to e-commerce. in an opportunity for air cargo.
Trading multiples and economic outlook (as of 29 April)
Danish listed transport companies1 The Shanghai Containerized Freight Index (SCFI) is down 19.0% YTD to
Historical averages Coronavirus impact2
(EV/FY1 EBITDA) (EV/FY1 EBITDA) 829 from its high 1023 in week 1, however up 9.5% YoY.
-0.8x
7.5x 7.6x 1100
7.1x 7.4x 6.6x
900
700
500
10y avg. 5y avg. 3y avg. Last close Current 1 11 21 2019 31 41 51 202061
2019
Note: 1) A.P. Møller-Mærsk, D/S Norden, DFDS, DSV Panalpina, NTG, TORM, 2) Lowest YTD is 4.6x on March 20 th
Source: Capital IQ, Shanghai Shipping Exchange, Forbes, IHS Markit
Coronavirus impact monitor – 11 May 2020 Page 18 Deloitte Economics © 2020Industry outlook: Deloitte contacts
How Deloitte can help you
Consumer Energy & Resources
• Please use the contact details opposite to get in touch
with our Financial Advisory industry group leaders and Mads Damborg Troels Ellemose Lorentzen
find out how we can assist you. Partner Partner
• We are well-positioned to assist in a range of tasks,
Email: madsdamborg@deloitte.dk Email: tlorentzen@deloitte.dk
such as those below.
Mobile: +45 30 93 54 81 Mobile: +45 30 93 56 90
Focus areas Financial Services Life Science & Health Care
Mike Robinson Mads Damborg
State aid packages
Partner Partner
Email: michrobinson@deloitte.dk Email: madsdamborg@deloitte.dk
Liquidity scenario analysis
Mobile: +45 30 93 00 03 Mobile: +45 30 93 54 81
Debt covenant advice and financing Government & Public Services TMT
Rikke Beckmann Danielsen Kasper Svold Maagaard
Business restructuring and M&A
Partner Partner
Email: rdanielsen@deloitte.dk Email: kmaagaard@deloitte.dk
Bankable business plan development Mobile: +45 30 93 56 92 Mobile: +45 30 93 54 54
Stakeholder management and process control Industrials Real Estate
Niels Stoustrup Tinus Bang Christensen
Impact assessment Partner Partner
Email: nstoustrup@deloitte.dk Email: tbchristensen@deloitte.dk
Economic modelling and forecasting Mobile: +45 30 93 59 15 Mobile: +45 30 93 44 63
Coronavirus impact monitor – 11 May 2020 Page 19 Deloitte Economics © 2020Appendices
Danish and European economic outlook Page 21
European corporate earnings expectations Page 22
Global GDP forecasts Page 23
Danish 2020 GDP expectations Page 24
Deloitte Government Response Portal Page 25
European market volatility and credit default probability Page 26
Aid packages Page 27
Coronavirus Impact Monitor – 11 May 2020 Page 20 Deloitte Economics © 2020Economic outlook
Latest indicators point to sharp economic slowdown in Denmark and across the Eurozone
Danish consumer confidence and YoY consumer
20 spending growth 8%
• Danish consumer confidence for April 2020, based on
C ons umer c onfidence, index
C ons umer s pending, c hange YoY
15 6%
survey data collected from 1-19 April 2020, declined to
10 4%
-11.9, down from 0.4 in March 2020.
5 2%
• The decline in consumer confidence is primarily driven
by deteriorating economic conditions in Denmark, but - -
the propensity to consume has also declined markedly. (5) ( 2% )
• The latest reading on Danish consumer confidence does ( 10) ( 4% )
point to a significant slowdown in consumer spending, ( 15) ( 6% )
even if the past link between consumer confidence and
( 20) ( 8% )
growth in consumer spending is not perfect.
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Danish consumer spending, change YoY (RHS) Danish consumer confidence
Eurozone PMI composite and YoY GDP growth
• The preliminary read on Eurozone PMI, measuring 90 7%
business sentiment across the Eurozone, plummeted to
P M I Composite
E urozone G D P, c hange Y oY
80 5%
an all-time low of 13.5 in April 2020, down from a prior
70
record low of 29.7 in March 2020. This indicates by far 3%
the largest collapse in European GDP growth recorded 60
1%
in over two decades of survey data collection. By 50
comparison, the lowest reading seen during the global (1% )
40
financial crisis was 36.2, reached in February 2008.
(3% )
30
• Looking into the details of the survey responses, it
20 (5% )
appears that the service sector bore the brunt of the
impact from the lockdown measures. However, 10 (7% )
manufacturing also saw a record fall. Supply chain 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
delays hit the highest ever reported. Eurozone GDP, change YoY (RHS) Eurozone PMI Composite
Source: Thomson Reuters Eikon, Markit Economics, Statistics Denmark, Eurostat
Coronavirus Impact Monitor – 11 May 2020 Page 21 Deloitte Economics © 2020Corporate earnings expectations
Corporate earnings expectations have been severely curtailed since the beginning
of the outbreak
Change in net income consensus estimates between
31 January 2020 and 8 May 20201
• The selloff in European equity markets, triggered by the
Energy
COVID-19 pandemic and the associated economic
slowdown, differs across sectors, ref. page 3.
Consumer discretionary
• To shed light on the underlying drivers of this selloff
Financials
across sectors, the chart on the right displays changes
in expectations of stock analysts. In particular, the Transportation
chart shows how stock analysts have downgraded
consensus expectations of net income across sectors Industrials
and time:
Materials
− Energy, incl. oil and gas companies, saw its net
Information Technology
income estimates being downgraded by 40%-70%
in 2020-2021, likely due to the sharp declines in oil
Other consumer staples
and gas prices.
Communication services
− Consumer discretionary, Financials, and
Transportation are also expected to be severely Utilities
affected. Their net income estimates for 2020 are,
on average, more than 30% below pre-crisis Health care
estimates.
Real estate
− Health Care and Real Estate are expected to
Food & staples retailing
weather the storm relatively well, both in the short
(2020) and long (2023) term. (80%) ( 70%) (60%) (50%) (40%) ( 30%) (20%) (10%) - 10%
2020 2021 2022 2023
Note: 1) Based on analyst estimates for S&P Europe 350 Index constituent companies
Source: S&P Capital IQ
Coronavirus Impact Monitor – 11 May 2020 Page 22 Deloitte Economics © 2020GDP forecasts
World Economic Outlook: GDP growth projections for Denmark, Eurozone and World
Denmark: GDP growth
10% 6 .0 %
5%
• IMF is projecting the global economy to contract by -
3% in 2020, far worse than the -0.1% growth (5% )
experienced during the 2009 financial crisis. The (4 .9 % ) (6 .5 % )
( 10%)
economic growth forecasts from the IMF assume that 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
the COVID-19 pandemic fades in the second half of Historical Forecast
2020 and containment efforts can be unwound. The
disruptions are assumed to be concentrated mostly in
Eurozone: GDP growth
the second quarter of 2020 for almost all countries, 10%
4 .7 %
with a gradual recovery thereafter, as it takes some 5%
time for production to ramp up after the shock. -
(5% )
• The global economy is projected to rebound in 2021, (4 .5 % )
(10%) (7 .5 % )
growing at 5.8% as economic activity normalises,
1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
helped by policy support. In comparison, global growth Historical Forecast
rebounded to 5.4% in 2010 from -0.1% in 2009.
• It is stressed that the 2021 rebound depends critically World: GDP growt h
10% 5 .8 %
on the pandemic fading in the second half of 2020,
5%
allowing containment efforts to be gradually scaled
-
back and restoring consumer and investor confidence.
(0 .1 % )
(5% )
(3 .0 % )
(10%)
1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
Historical Forecast
Source: IMF, World Economic Outlook (April 2020)
Coronavirus Impact Monitor – 11 May 2020 Page 23 Deloitte Economics © 2020Danish 2020 GDP expectations
Danish GDP projected to contract by 4.7% according to our survey of forecasters
• The Danish Central Bank forecasts three scenarios for the Danish economy in 2020. The three scenarios differ by the speed with which containment
efforts are unwound. In the mild scenario, where GDP is contracting by 3% in 2020, restrictions are gradually eased from Easter to a full lifting of
restrictions by October 2020.
• The Confederation of Danish Industry has based its projection of a 7% decline in 2020 GDP on a survey of its member firms.
• Nordea has published an economic forecast for the Danish economy based on three scenarios for global developments: a V-shaped recovery, a slower
U-shaped scenario, and a pessimistic L scenario. The positive V-shaped recovery is associated with a steep decline in GDP in the first half of 2020, but
the recovery is taking sharp during the summer, and GDP declines by a relatively modest 0.5% in 2020.
• The Economic Councils project two scenarios for the Danish economy. In the optimistic scenario, the economy rebounds relatively quickly, and GDP
declines by 3.5% in 2020. In the pessimistic scenario, a second wave of COVID-19 emerges during the fall, and new containment efforts and
restrictions are activated; new aid packages are introduced. In this scenario, GDP contracts by 5.5% in 2020.
Denmark: GDP growth and 2020 market expectations
8%
6% 3 .9 %
3 .2 %
4% 2 .3 % 1 .9 % 2 .3 % 2 .0 % 2 .4 % 2 .4 %
1 .3 % 1 .6 %
0 .9 % 0 .9 %
2% 0 .2 %
(0 .5 % )
-
( 2% )
(4 .9 % )
( 4% )
M edian; (4 .7 % )
( 6% )
( 8% )
(10%)
(12%)
(14%)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Historical (IMF) Danish Central Bank Ministry of Finance
The Economic Councils IMF Confederation of Danish Industry
Danske Bank Nordea Median
Source: IMF, Danish Central Bank, Danish Ministry of Finance, DØRS, Confederation of Danish Industry, Danske Bank, Nordea
Coronavirus Impact Monitor – 11 May 2020 Page 24 Deloitte Economics © 2020Deloitte Government Response Portal
Database of financial, tax, business, and social measures announced by governments
globally
• To aid our clients in navigating the complex landscape of COVID-19 assistance programmes, Deloitte has developed a free digital portal that captures
the latest financial, tax, business, and social measures enacted by country.
Access the portal!
Coronavirus Impact Monitor – 11 May 2020 Page 25 Deloitte Economics © 2020Market volatility and European credit default probability
Equity market volatility remains elevated and comparable to the levels observed during the
global financial crisis
VSTOXX Index1
100
• The VSTOXX Index measures 30-day implied volatility 90
of the EURO STOXX 50 equity index and reflects 80
investors' uncertainty about future equity market
Volatility index
70 68
moves.
60
• As shown, the coronavirus induced an increase in 50
volatility to a level comparable to that experienced
40
during the global financial crisis in 2008. Since then,
30 30
volatility has declined, but it still remains elevated and
20
comparable to the levels observed during the global
financial crisis. 10
0
iTraxx Europe Crossover index: Default probability2
• The chart opposite shows the development in the %
implied default probabilities based on the 5Y iTraxx 70
European Crossover spread of Credit Default Swaps and 61.7%
60
an assumed recovery rate of 40%. It measures default
Default probability in %
probabilities on a portfolio of sub-investment grade 50
corporate debt in Europe.
40
• With a current default probability of about 35%, we are 34.9%
30
at the highest level since the European debt crisis, but
still below peak financial crisis levels. 20
• As the index reflects cost of debt, any refinancing will 10
be costly for leveraged companies, even though interest
rates are close to being record low. 0
Note: 1) VSTOXX as volatility index of EURO STOXX; 2) Default probability calculated based on 5Y iTraxx European Crossover CDS and a recovery rate of 40%.
Source: Thomson Reuters Eikon
Coronavirus Impact Monitor – 11 May 2020 Page 26 Deloitte Economics © 2020Aid packages
(1/7)
Country Size of aid Type of aid Target groups
• Liquidity measures
• SMEs
• Loan guarantees
• EUR 38bn • Family-owned
• Tax deferrals
(~9.5% of companies
• Labour subsidies for companies that have to reduce working hours
Austria GDP) • One-person
• Aid for one-person and family-owned enterprises, tourism and cultural sectors
enterprises
• Safety net for small businesses
• Emergency wage subsidies
• About • Business and personal tax deferrals
• Consumers
CAD 146bn • Student loan payment delays
• Corporates
(~6.2% of
Canada • Employees
GDP)
• Reduction in VAT for SMEs
• About • Exemption from social security payments for up to five months
CNY 1.25tn • Postponement of Housing Provision Fund payments for companies affected by
• SMEs
(~1.25% of COVID-19
China GDP) • Special-purpose bond issuance quota lifted and front loaded (for infrastructure
projects)
Sources: Danske Bank, Deloitte Covid-19 portal, reuters
Coronavirus Impact Monitor – 11 May 2020 Page 27 Deloitte Economics © 2020Aid packages
(2/7)
Country Size of aid Type of aid Target groups
• Fiscal: • Salary compensation scheme running for three months, covering up to 90% of
DKK 98bn an employee's salary and runs for four months
(~4.3% of • Schemes that cover income for self-employed persons and help to cover fixed
• Self-employed
GDP) costs
• SMEs
• Extend deadlines for payroll taxes and VAT, including temporary return of
• Credit: Up to • Corporates
Denmark taxes already paid in March in some cases
DKK 301bn • Airlines
• Local governments will move future investments to 2020
(~13.1% of • Government guarantee for some corporate debt and airlines
GDP) • Enhanced export credit
• General escape clause for fiscal rules
• Maximum flexibility on state aid rules
• Member states
• EUR 500bn • Pandemic Crisis Support': loan through ESM in the tune of 2% of countries'
• Corporates
(~3.5% of GDP (EUR 240bn)
European • SMEs
GDP) • Corona Response Investment Initiative' to support health care efforts, SMEs &
Union (EU) • Health care efforts
vulnerable sectors
• Stepped up EIB lending to SMEs (EUR 200bn)
• Additional budgets worth EUR 4.1bn largely to business aid and healthcare
• EUR 18bn • Deferred corporate tax and pension payments • Corporates
(~7.5% of • Finnvera gets EUR 10bn additional loan guarantee limit to help businesses • SMEs
Finland GDP) • Emergency aid to companies in worst affected small companies
• State Pension Fund will buy EUR 1bn of commercial paper
Sources: Danske Bank, Deloitte Covid-19 portal
Coronavirus Impact Monitor – 11 May 2020 Page 28 Deloitte Economics © 2020Aid packages
(3/7)
Country Size of aid Type of aid Target groups
• EUR 4bn package to support start-ups
• Extended deadlines for social security and tax payments and sick leave
payments for caring for children
• EUR 400bn • Affected businesses
• Short-time working scheme, under which the state will cover entirety of lost
(~16.5% of • SMEs
salaries
France GDP) • Employees
• EUR 300bn for credit guarantees to support corporation bank-funding
• Cash handouts of EUR 1500 for affected SMEs. Additional support of EUR 2,000
can be provided to prevent bankruptcy
• Immediate assistance program to support SMEs and self-employed (EUR 50bn)
• Liquidity measures for affected companies (KfW credit & state guarantees incl.
• EUR 750bn equity stakes) • Affected companies
(~22% of • Easier access to short-term work compensation • SMEs
Germany GDP) • Easier access to unemployment benefits and protection of tenants • Self-employed
• Lower VAT rate (7%) for restaurants for 1 year
• Deferred tax payments for companies
• Suspended tax and contribution payments for 4 months for businesses directly
affected by the outbreak of COVID-19
• EUR 800 bonus for employees unable to work due to outbreak
• EUR 10bn • Corporates
• Sales tax reduced to 6% from the standard 24% for products needed to
(~5.3% of • Affected companies
prevent the spread of COVID-19
Greece GDP) • Citizens
• Businesses and workers directly hit by outbreak will be allowed to pay only
60% of their commercial property lease rentals
• State to pay all outstanding obligations to citizens
Sources: Danske Bank, Deloitte Covid-19 portal
Coronavirus Impact Monitor – 11 May 2020 Page 29 Deloitte Economics © 2020Aid packages
(4/7)
Country Size of aid Type of aid Target groups
• Help for workers facing temporary layoffs
• SMEs
• EUR 375bn • Guarantee fund for SME loans
• Corporates
(~21% of • Moratorium for business and personal mortgage repayments
• Employees
Italy GDP) • One-off payment of EUR 500 for self-employed and cash bonus for Italians still
• Self-employed
working, financial support to families
• JPY 12.1tn • Favourable credit lines for SMEs • SMEs
(~19.6% of • Delayed tax and social security payments • Citizens
Japan GDP) • Cash handout of 100,000 JPY to all citizens
• Wage Subsidy scheme
• Permanent lift in welfare payments
• NZD 12.1bn • Corporates
• Loan scheme for SMEs
(~4% of GDP) • Employees
New Zealand • Reintroducing depreciation deductions
• Lifting the threshold for payment of provisional tax
Sources: Danske Bank, Deloitte Covid-19 portal
Coronavirus Impact Monitor – 11 May 2020 Page 30 Deloitte Economics © 2020Aid packages
(5/7)
Country Size of aid Type of aid Target groups
• Government loan guarantee specifically aimed at SMEs (NOK 50bn) and
reintroduction of Government Bond Fund (NOK 50bn)
• Corporate deficits can be written off against tax on surpluses from previous
• Fiscal: years
NOK 201bn • Owners of loss-making companies can postpone payments of the wealth tax
(~6.7% of • "Temporary tax relief for airlines, drop in both passenger tariffs and airport • SMEs
GDP) tariffs" • Employees
• Reduction of employee’s tax by 4 pp. for 2 months • Self-employed
Norway • Credit: • Other benefits, i.e. government pays for the first 20 days for temporary lay- • Corporates
NOK 100bn offs • Airlines
(~3.3% of • Reintroduction of Government Bond Fund (NOK 50bn)
GDP) • VAT reduction from 12% to 6% from April 1 for specific sectors directly
affected by COVID-19
• Cash injections directly to corporates and Kommunalbanken
• Guarantee to Airlines and support to start-ups
• EUR 9.2bn
• Credit lines for affected businesses and tax deferrals
(~4.3% of • Corporates
• Possible moratorium on capital and interest payments
Portugal GDP)
Sources: Danske Bank, Deloitte Covid-19 portal
Coronavirus Impact Monitor – 11 May 2020 Page 31 Deloitte Economics © 2020Aid packages
(6/7)
Country Size of aid Type of aid Target groups
• Public guarantees (EUR 100bn)
• EUR 117bn
• Deferred tax payments for SMEs • Corporates
(~9.4% of
• Suspension of mortgage payments • SMEs
Spain GDP)
• Measures for tourism and transport sectors
• Businesses will be offered the opportunity to have tax payments for the period
• Fiscal: January to March repaid. Repaid taxes can be kept for a period of a year (SEK
SEK 100bn 300bn)
(~2% of GDP) • Increased loan facilities and introduction of government loan guarantees for
• Corporates
Swedish businesses
• Credit: • SMEs
• Intensive care fund for SMEs of SEK 100 bn and allowance for SME to
Sweden SEK 565bn • Specific sectors
postpone annual VAT payments for 4 months
(~10% of • Credit guarantees to airlines and support to Health Agencies
GDP) • Short term work allowance scheme avoids termination of employment
• A temporary discount for rental costs in vulnerable sectors
• Aid package aimed at helping companies where CHF 8bn is earmarked to fund
the imposition of short-time work at firms; other tranches for hardship loans
• CHF 42bn • Corporates
and to support specific sectors
(~6% of GDP) • SMEs
Switzerland • Special guarantee scheme to support SMEs in liquidity difficulties due to
COVID-19
Sources: Danske Bank, Deloitte Covid-19 portal
Coronavirus Impact Monitor – 11 May 2020 Page 32 Deloitte Economics © 2020Aid packages
(7/7)
Country Size of aid Type of aid Target groups
• Delayed tax payment and temporary arrangement for compensation of labour
costs
• Corporates
• Business Finance Guarantee Scheme, funding opportunities for companies
• EUR 16bn • SMEs
experiencing difficulties in obtaining bank loans and bank guarantees
The (~2% of GDP) • Self-employed
• Assistance scheme for self-employed
Netherlands • Affected companies
• Compensation scheme for specific sectors
• EUR 4,000 compensation for firms heavily affected
• Government-backed loans and guarantees
• SME GBP 3,000 cash grant
• CBILS (Corona Business Interruption Loan Scheme) of up to £5m to help firms
• GBP 480bn manage cash flows. Terms from 3 months to 10 years for term loans and asset • Corporates
United (21% of GDP) finance. Interest-free first year • SMEs
Kingdom • COVID-19 self-employment income support scheme
• Coronavirus Job Retention Scheme
• Deferring tax payments
• Loan guarantees and assistance for large companies (USD 500bn)
• Aid for SMEs (USD 671bn)
• USD 2.8tn • Unemployment insurance extension. Jobless workers to receive extra USD
• Large corporations
(~13% of 600/week for 4 months
United States • SMEs
GDP) • More health care spending (USD 225bn)
of America • Direct payments to individuals. Lower and middle-income Americans to receive
USD 1200 per adult and USD 500 for every child under age 17
Sources: Danske Bank, Deloitte Covid-19 portal
Coronavirus Impact Monitor – 11 May 2020 Page 33 Deloitte Economics © 2020You can also read
