With governments around the world ordering mandatory isolation and closing unnecessary businesses and trade, industrial activity around the world has basically stalled. The recession in several major economies will drive down the prices of industrial raw materials and affect commodity exporters.
In industries that are less diversified and tightly integrated, such as automobiles, aircraft, semiconductors, and electronic products, machinery production will certainly be affected, and these industries are expected to have their supply decline. In these industries, the shutdown of a single factory may cause other production enterprises in the supply chain to passively reduce production due to component supply problems, or even stop production in severe cases.
Japan's machinery market is expected to suffer a major blow due to its heavy dependence on exports. South Korea's Samsung (Samsung) is the world's largest supplier of memory chips and display panels. The closure of its factory will affect the supply chain of the electronics industry, which will lead to a series of shutdowns in the network of suppliers, distributors and resellers due to blocked parts procurement. This situation will be replicated in the global industrial landscape throughout Asia-Pacific, Europe and the rest of the Americas.
Similarly, in the industrial automation market, the processing industries from automobiles, shipbuilding, electricity to oil and gas, chemicals, oil refining and petrochemicals will not only be hit by COVID-19, but also by the lack of investor confidence.
China's suspension of production has impacted other countries in the Asia-Pacific region, where most countries rely on China as their main export market for goods and services. Although the current epidemic in China seems to have been brought under control, most production and trade activities are still restricted. As overseas demand contracted, China suspended overseas investment.
At the same time, Omdia expects the Japanese industrial automation equipment market to resume this year in the fourth quarter of 2019. However, due to the prevalence of COVID-19 (New Crown Virus), the recovery of the Japanese industrial automation equipment market will be postponed until 2021. Europe will also be hit hard, and Germany and Italy may fall into recession and may drag the euro zone.