Quiet fac­to­ries

Muscat Daily - - BUSINESS -

Many fac­to­ries closed for the Lu­nar New Year break have de­layed re­open­ing - ex­ceed­ing a three-day ex­ten­sion of the hol­i­day that author­i­ties im­posed to pre­vent large pub­lic gath­er­ings.

Man­u­fac­tur­ing ac­counts for around a third of China’s econ­omy and the auto in­dus­try is set to take a sharp blow, given that Hubei’s quar­an­tined cap­i­tal, Wuhan, is among China’s largest pro­duc­tion bases.

A Ford spokesman told AFP pro­duc­tion would re­sume around next week, but said the epi­demic has al­ready ‘sup

pressed or de­layed con­sumer pur­chases to a large de­gree’.

Dongfeng Mo­tor Cor­po­ra­tion, which is based in Wuhan and is one of China’s big­gest auto groups, said its re­open­ing ‘will de­pend on the pre­ven­tion and con­trol of the epi­demic’.

Rat­ings agency S&P has pre­dicted the de­lay in open­ing fac­to­ries could hit car pro­duc­tion by up to two per cent and warned the real im­pact may be larger as work­ers could poten

tially shun Hubei when called back to work.

Ox­ford Eco­nom­ics be­lieves the virus could knock at least two per­cent­age points off China’s growth in the first quar­ter be­fore see­ing an im­prove­ment in April-June.

Still, it cut its full-year out­look to 5.4 per cent ex­pan­sion - markedly down from its pre­vi­ous es­ti­mate of six per cent, which was in line with 2019 and the slow­est in three decades.

How­ever, the big­gest hit to the econ­omy is likely to be from China’s army of con­sumers say­ing at home, ob­servers said, with Moody’s an­a­lysts ex­pect­ing spend­ing on trans­porta­tion, re­tail, tourism and en­ter­tain­ment to be ham­mered.

The 2019 Lu­nar New Year hol­i­day saw re­tail and cater­ing en­ter­prises re­port com­bined sales of around US$150bn, ac­cord­ing to state news agency Xin­hua.

Do­mes­tic travel rev­enues clocked in at more than US$73bn, it said, as peo­ple trav­elled across the coun­try to visit fam­ily, while the For­bid­den City hosted nearly half a mil­lion vis­i­tors.

But this year, shop­ping malls, eater­ies, cinemas and trans­port hubs were quiet, while the For­bid­den City was closed.

Big-name high-street ti­tans are also feel­ing the strain. Nike and cloth­ing gi­ant H&M have

both closed half their stores in China, with the Swedish firm telling AFP a ‘short-term im­pact on sales is in­evitable’.

Jew­ellery chain Pan­dora said there had been ‘an un­prece­dented de­cline in con­sumer traf­fic in China and Hong Kong’.

Ap­ple and Star­bucks have also shut down out­lets. Pas­sen­ger vol­umes on air, rail, road and wa­ter trans­port plunged more than 70 per cent from a year ago.

While author­i­ties have stepped up to pro­vide sup­port - the cen­tral bank has pumped more than US$200bn into fi­nan­cial mar­kets this week - Moody’s an­a­lysts said the full ben­e­fits are ‘un­clear’ for now.

“Given the high lev­els of un­cer­tainty, con­sumers may sim­ply save the spend­ing they had planned for the Lu­nar New Year hol­i­day, and could spend more cau­tiously in gen­eral,” they said.

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