Monaco’s Retail Sector Collapses during Pandemic

According to a recent survey done by the IMSEE, the business climate collapsed in Monaco’s retail sector for the month of March. This collapse occurred after the Principality put measures in place stop non-essential activities from mid-March in order to fight the spread of COVID-19.

Every month, the IMSEE (Monegasque Institute of Statistics and Economic Studies) interviews a representative sample of economic agents in the Principality’s retail trade via a survey questionnaire. The questions relate to the past month compared to an average month.

Retail establishments in Monaco are mostly located in the districts of Monte-Carlo and La Condamine. With 800 establishments and 1.5 billion euros in turnover, the retail sector represents an important part of the Monegasque economy.  Retail trade was the 8th contributor to the Principality’s GDP in 2017.

From 2011 to 2018, the number of employers remained fairly stable with an average of 462 employers. The number of jobs has increased since 2011 and reached nearly 3,000 jobs in 2018.  In 2018, the retail trade generated 1.5 billion euros in turnover, an increase of + 3.7%. Over 10 years, the turnover of the retail trade has increased by +64%. 

The IMSEE survey indicated a loss of  29 points for ‘General business outlook’ compared to February, which is the lowest level ever recorded.  The overall business climate section of the survey went from 99 points in January, to 90 points in February, to 61 points in March. ‘Sales’ show an unprecedented fall (-78 points compared to the previous month). ‘Forecast sales’ dropped 52 points. ‘Inventory levels’, ‘order forecasts’ and ‘employment’ all dropped sharply and are well below the average level. Prices are improving and expected to continue dropping, which may be a small silver lining for some during these difficult times.    

According to a recent interview by Pierre-André Chiappori, Monegasque economist and Professor of Economics at Columbia University, one thing that must be avoided at all costs during this pandemic is business chains going bankrupt. There is a lot of capital needed to start a business. Bankruptcy is extremely hard, since it is expensive and time consuming to re-establish a business.

Certain governments, like Monaco, are providing aid to businesses to help keep them afloat during these difficult and economically unpredictable times. The Principality, which usually has budgetary surpluses, is likely to have a deficit of 500 million euros or more this year.  However, Monaco’s deficit will most likely be balanced by a reserve fund from past budget surpluses, which is meant for extraordinary situations like this one. 

The IMSEE was created in 2011 by the Prince’s Government with the mission of promoting knowledge of the Principality’s economic and social environment. The IMSEE is known as the observer of Monegasque economic activity.