COVID-19's effect on industries has varied dramatically and will continue to be felt for years in terms of the growth outlook, financial policy and credit metrics, S&P Global Ratings said on Monday.
Shifting patterns of work and leisure have accelerated further while and environmental, social, and governance (ESG) considerations have moved to the foreground, it added.
With the widespread availability of coronavirus vaccines in sight, planning for post-pandemic business conditions among companies is taking on greater urgency. For certain sectors like retail, media and entertainment, that means tackling secular changes that have been accelerated (rather than caused) by the crisis.
S&P said the pandemic has widened the gaps between regions and industries and within societies. In the corporate sector, disparities are set to grow between companies and industries that benefit from pandemic-accelerated digitalisation and those suffering from structural shifts in working practices and behaviour.
"Even if a vaccine is widely available by mid-year, as we assume in our base case, containment of the pandemic looks to be very uneven worldwide." The main risk for the first half of next year is that additional surges of COVID-19 will require renewed lockdowns and jeopardise a fragile economic recovery -- leading to further credit deterioration particularly in sectors most exposed to social distancing and travel restrictions.
On the bright side, said S&P, record low interest rates and abundant liquidity will likely persist beyond next year, cushioning the effects of the historic surge in leverage that has supported companies, households and governments through the pandemic.
As the global economic recovery gains a toehold, the dialing back of fiscal support, which has both protected the most vulnerable and provided a bridge to the recovery, will require skillful policymaking. Premature austerity constitutes a key risk in 2021, said S&P.
Even if the global economy gets back on track toward year-end, with the United States regaining its pre-pandemic GDP level (China has already recovered in this sense), it is likely to take until 2022 or later for many of the world's economies to fully recover.
"The aftermath of the crisis is likely to bring significant challenges for credit. There could be significant aftershocks given the severe economic damage, the dramatic expansion of private and public debt and the roiling of labour markets — undermining business models on which complex debt structures reside."