Different Covid-10 Scenarios for Business Decision-makers
- 1. Alternative scenarios for the impact of the COVID-19 7 May 2020
- 2. As an organization responds to COVID-19, resilient leaders should survive the crisis, not thrive. The key to that is to evaluate planning actions within the context of geographic location and different economic scenarios. Here’s a brief of an insightful report – conducted by ACAPS, that could help you grab a better picture of the world in the next 6 - 12 months to better your adapting and planning strategy. You can take a look at the full report here. Different COVID-19 scenarios for strategic leaders
- 3. Global containment High-income countries manage to keep infection rates to levels that enable health systems to continue to deliver essential services by improving identification of new cases and entering a planned pattern of imposing, relaxing, re-imposing containment measures as necessary. Meanwhile, their governments focus on protecting economies and social cohesion. International travel resumes after three months, predominantly between high- income countries where infection levels have been on the decline for several weeks. As containment measures are relaxed, most people are able to return to work while others continue to receive some measure of state support. Middle- and low-income countries are not overwhelmed by the virus as there are relatively few symptomatic cases and only patients with chronic or pre- existing conditions present complications. In most cases, spread is slowed by the enforcement of severe restrictions in place for 4-6 months; most national health systems successfully implement business continuity plans; health service provision is only marginally disrupted; and there the secondary health effects of the pandemic are minimal. The global economy shrinks as containment measures restrict some domestic and much international business. In some countries civil society plays an active role in meeting urgent needs and the delivery of essential services. The world witnesses acceleration in tech development with more businesses’ models shifting online. Epidemiology • Major outbreaks are limited to very few low-income countries • Outside of these countries, health services continue at pre-crisis levels • Where outbreaks occur, there is insufficient testing or critical care capacity to treat most COVID-19 patients. Living conditions • Containment measures disproportionately impact the poor in all nations. • Household income reduces, resulting in child labor and early marriage in low-income countries • Education attainment gap between rich and poor is fueled • Access to water and electricity will decrease as costs increase. Transport and rubbish collection services reduce. Social cohesion • In countries with high levels of trust in the authorities and strong social networks, social cohesion becomes stronger • Social unrest, misinformation, rumors, and panic are triggered in where information channels lack of public knowledge of the disease • A sharp increase in nationalism and xenophobia • Authoritarian governments use the opportunity of emergency legislation to target opposition or minority groups and parties • Lockdowns and isolation measures lead to an increase in intimate partner violence and child abuse around the world, especially in gender-unequal countries
- 4. Economy Containment measures disproportionately impact the poor in all countries. In high income countries and those with existing successful social protection programs, effective measures to assist households are implemented, although this does not fully compensate for loss of income, perhaps supported by regional IFIs. In countries with no economic-coping capacity, governments are unable to scale up existing, or introduce new, social protection mechanisms. Expected GDP growth in 2020 -5% -5% -3% 0% United States European Union China Japan Industry impact (supply side) Industry impact (demand side) Production cuts in EU and US, disruption of suppy chains Weak demand in EU and US spreads globally, industries hurt Source: Deloitte Global containment Economy Timing of economic recovery First half of 2021 First half of 2021 CN: Second half of 2020 JP: Second half of 2020 Rest of the world: Recession, with recovery in first half of 2021 Rest of Asia: First half of 2021 Source: Deloitte
- 5. Partial containment Reported COVID-19 cases increase significantly in high-income countries over the coming weeks, but the number of new cases reported has substantially reduced by July, indicating that countries have successfully contained the virus, for now. High-income countries begin to relax containment measures, temporarily re-imposing as necessary. International travel increases slightly, predominantly for economic purposes, within continents, and between high-income countries that believe they have the virus under control. Large outbreaks occur in many of middle- and low- income countries, overwhelming national health systems. The actual spread of the disease is unknown, due to inadequate testing, reporting and data management, but morbidity and mortality related to COVID19 and other endemic diseases rises rapidly Some middle- and low-income countries relax containment measures too early, primarily out of economic necessity and pressure from their populations, but also because high-income countries have done so. This enables the spread of the virus resulting in rapid increases in cases and new spikes in countries that had seen reductions. Other middle- and low-income countries continue to impose severe containment measures, even where health systems appear to be coping with the outbreak. These measures negatively affect the economy and employment and continue despite protests. These governments rely on national sovereignty arguments and appeals to populations to “put the country first” to justify their policies and forestall regime change. Epidemiology • Health services in some middle- and many low-income countries are overwhelmed • Testing or critical care capacity is insufficient to treat most COVID-19 patients • Valid fear of contracting COVID-19 at healthcare facilities prevents many people from seeking care, so health concerns go unaddressed Living conditions • In some countries, governments cease or delay payment of state salaries • People take out new debts in order to pay for basic necessities in the face of income losses • In countries where schools re-start, not all students able to return creating longer term reductions in school attendance • Access to water and electricity will decrease as costs increase. Transport and rubbish collection services reduce. Social cohesion • Social cohesion strengthens in some places and deteriorates in others. • Many people are pushed to violate government containment measures and engage in activities that were already illegal • Fake news and misinformation campaigns increase, fueled by a lack of clear, official, public health messaging and political rivalry • Violence against women continues during the COVID19 pandemic and is even more underreported than usual. • Secondary impacts include severe restrictions on the movement of displaced people trying to escape conflict or persecution or trying to return home
- 6. Economy As in scenario 1, containment measures disproportionately impact the poor in all countries. In some countries, governments cease or delay payment of state salaries. In fragile states, development and humanitarian actors seek to continue to pay salaries. Many families lose caregivers or breadwinners as a direct result of the disease. In many conflict areas insurgents increase activities to access goods and profit from shortages. Expected GDP growth in 2020 -8% -8% 1% -3% United States European Union China Japan Industry impact (supply side) Industry impact (demand side) Deep drop in output, supply chains disrupted Severe decline in global demand, financial stress akin to 2008 Source: Deloitte Partial containment Economy Timing of economic recovery Second half of 2021 Second half of 2021 CN: Second half of 2021 JP: Second half of 2021 Rest of the world: Second half of 2021 Rest of Asia: First half of 2021 Source: Deloitte
- 7. Limited containment Cases of COVID-19 increase in many countries and global mortality rates soar. Most governments enact increasingly more stringent containment measures to prevent cross-border movement and curtail non-essential domestic movement. Countries that have managed to reduce morbidity and mortality have achieved this at significant cost to their economy and, in some instances, observance of human rights. The virus spreads across all regions, and only a few countries begin to see a decline in new cases with no subsequent resurgence. The rapid spread is facilitated by, and the impact more severe, in countries with: a. large-scale refugee and displacement sites; b. densely populated urban areas, including low income informal settlements; c. insufficient or substandard domestic water and sanitation provision and poor hygiene practices; d. high rates of illiteracy e. leaders, either elected or popular, who deny the seriousness of the virus and refuse to endorse the special measures to limit its spread. In many countries, the scope of the spread is not realized early enough to effectively mitigate transmission, due to insufficient testing and lack of access to healthcare services and supplies. Many middle- and low-income countries have insufficient critical care staff, supplies, and equipment. Even where funding is available, procurement is slow due to increased global competition for scarce resources. Epidemiology • There is insufficient testing or critical care capacity to treat most COVID-19 patients resulting in large numbers of COVID-19 related deaths. • High mortality rates for health workers, also creates significant capacity gaps in health services. • Confidence in health systems and healthcare workers is challenged Living conditions • High levels of unemployment and minimal legal income-generating activities. • Many families lose caregivers or breadwinners as a direct result of the disease • An unprecedented number of people are unable to meet their basic needs for survival • Governments are unable to provide many essential services, leading to the establishment of new service delivery mechanisms, with a large role for communities and elites Social cohesion • Countries with large migrant and / or refugee communities see a sharp increase in nationalism and xenophobia • Some armed opposition groups, including Islamic State, use the pandemic to regroup and launch new campaigns and access resources, leading to an increase in insecurity • Increased poverty leads an increasing number of people, including children, to join armed groups. • Some governments collapse, and the lack of political stability makes the national response more challenging • Persuasive state-sponsored media campaigns convince the majority of the population of the efficacy and importance of the measures
- 8. Economy The global economy deteriorates rapidly as the length of government sponsored containment measures increases, leading to high levels of unemployment and minimal legal income-generating activities. Low-wage economies which have manufacturing industries which rely on orders from high-income countries face a collapse of their industries and associated high levels of unemployment. Governments cease or delay payment of state salaries. In fragile states, development and humanitarian actors seek to continue to pay salaries. Expected GDP growth in 2020 -10% -10% -3% -6% United States European Union China Japan Industry impact (supply side) Industry impact (demand side) Severe drop in output, supply chains break down Severe decline in demand, many business failures, some nationalization Source: Deloitte Limited containment Economy Timing of economic recovery 2022 2022 CN: 2022 JP: 2022 Rest of the world: 2022 Source: Deloitte Rest of Asia: 2022
- 9. The proposed scenarios consider three ways the global humanitarian context might change in the coming six months. They are not forecasts; their aim is to offer alternative, possible futures to assist in decision-making. Please note that not all scenarios are equally probable; they are developed to consider significantly different ways the future may develop. The actual future may lie somewhere between the three (combining different elements of each). Be prepared for what the future might hold. All credits go to ACAPS