Retail Savings & Investments - France: Coronavirus (COVID-19) Sector Impact
The coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy, affecting millions of people globally. The contagious coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring the novel coronavirus a pandemic on March 11, 2020.
Fears surrounding the impact of COVID-19 have already significantly impacted the global economy, with key markets across the globe losing 20-50% of their value year-to-date. Many economists and institutions have cut their forecasts, with consensus global GDP growth currently at 2.6% for 2020 and many experts predicting the potential onset of recessionary environments.
A similar trend is expected in France as well, as economic growth in the country is expected to register a dip in the first quarter of 2020 and will decelerate further if this disease is not controlled at the earliest. The decline will have an adverse impact on all sectors including retail investments.
This report focuses on the impact of the coronavirus outbreak on the French economy and the country’s retail savings and investment market. It also highlights the measures adopted by the government to combat COVID-19. Based on our proprietary datasets, the snap shot contrasts GlobalData’s pre-COVID-19 forecasts and revised forecasts of total retail bond, deposits, equities and mutual funds holdings in terms of value and growth rates. It also analyses the effects on HNW wealth, examining the importance of different industries as a contributor to HNW wealth.
French retail savings and investments are forecast to contract by 0.6% over the course of 2020 as the economy has come to a standstill thanks to the impacts of COVID-19. Retail equity and mutual fund holdings are expected to take the brunt of the economy’s slowdown, with respective declines of 24.6% and 9.4% anticipated.
Retail deposits and holdings, on the other hand, are set to fare better than initially expected courtesy of a flight to safety away from risk assets as well as a move away from cash holdings. However, more pronounced declines in risk asset holdings have resulted in a 2020 forecast for total retail holdings that is 3.3 percentage points lower than predicted before the onset of COVID-19.
The effects on the different segments that make up the high-net-worth (HNW) market will be disproportionate. The hotels, restaurants, and leisure sector will be hit hardest given the ongoing lockdown. However, the sector only contributes 2.3% to total HNW wealth. We also expect strong declines in the manufacturing sector, given that factories are running at just 56% of capacity. Steep declines in bank shares will also have a negative effect on the financial services sector despite the government’s €300bn ($337bn) program to secure bank loans to companies.
Being more agile and less dependent on high-street spending, the tech sector, which contributes one tenth of HNW wealth, is expected to hold up more robustly.
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