Monaco’s business climate “collapsed” in the retail, trade and auto repair sectors in the month of March, as restrictions to stem the spread of the coronavirus were put in place and shoppers reduced their spending on everything except the essentials.
According to statistics body IMSEE, in the month of March 2020 the synthetic indicator lost 29 points compared to February, reaching the lowest level ever recorded.
“Measures to contain the Covid-19 epidemic, such as confining and stopping ‘nonessential’ activities, have affected the return rate, which is significantly lower than that usually observed,” IMSEE said in its latest retail trade report released on Tuesday. “This brutal deterioration results from a downturn in the general outlook for activity, past sales and order intentions, and therefore a significant drop in the expected employment balance.”
With 800 establishments and €1.5 billion in turnover, the retail sector represents an important part of the Monegasque economy. The downturn will, unsurprisingly, take a significant chunk out of the Principality’s annual GDP.
“Although certain apprehensions linked to the development of the Covid-19 health crisis were observed as early as February, the implementation of containment measures from mid-March had a significant impact,” concluded the statistics body.
March figures show that sales dropped by 78 points compared to the previous month, while forecast sales deteriorated sharply (-85 points) and inventory levels fell well below their long-term average.
Orders also dropped significantly in March (-72). Prices did improve compared to the month of January but remained below normal levels. Meanwhile, expected prices trended downward. Both past and forecast employment were down sharply and were well below their averages at -20 and -37 points respectively.
The steep decline in retail trade was certainly not unique to Monaco. Retail sales in the euro zone suffered their largest decline on record in March as shoppers reduced their spending on everything except food and online orders.
Sales in the 19 countries sharing the euro zone fell by 11.2% in March from February and by 9.2% year-on-year, according to EU statistics agency Eurostat. The declines were sharper than market expectations of 10.5% and 8.0% respectively.
The month-on-month decline was the steepest in Eurostat data going back to 1999, while the year-on-year figure was the worst on record in data reaching back to 2000. It was also twice as large a decline as in February 2009, the worst month of the 2008-2009 financial crisis.