ING economists have explored the 4 possible economic outcomes once the Covid-19 crisis has passed.
As the Covid-19 crisis intesifies, governments have started to roll out large incentive packages to prevent a sharp downturn of their economies which could potentially drop the global economy into a deep recession. Early estimates predicated that, should the virus become a global pandemic, most major economies will lose at least 2.4 percent of the value their gross domestic product (GDP) over 2020, leading economists to already reduce their 2020 forecasts of global economic growth down from around 3.0 percent to 2.4 percent. In the worst-case scenario, the world economy could contract by 0.9 per cent in 2020.
Support and protect employees in this brave new world. Many institutions have put basic protections in place for their employees and customers. Companies have activated no-travel and work-from-home policies for some workers and physical-distancing-at-work measures for others. The challenge is evolving. For remote workers, interruptions are more recurrent than in the office. Making a mental separation from a sometimes-messy home life is tough. Workers are finding that they don’t have the skills to be successful in a prolonged remote environment, from networking to creating routines that drive productivity. They worry that staying isolated could make them less valuable, especially in a falling environment.
Three goals are essential, companies need to increase communication, balancing the needs of the business with expectation setting and morale building, so employees know that their well-being is top of mind. They also need to change working standards, making remote work practical and simple whenever possible. They must also protect people’s health, with whatever measures are suitable to the workplace: positive hygiene habits, personal protective equipment, amended sick-leave policies whatever it takes to guarantee health and safety.
Monitor leading indicators of how and where the pandemic is evolving and conduct scenario planning using both epidemiological and economic inputs. Earlier, we drawn out the swing factors to watch to understand how the coronavirus pandemic might develop. As companies develop scenarios, they might want to consider the article “Safeguarding our lives and our livelihoods”.
Think about the next horizons of COVID-19. Efficacy of health-system surge. As the world has awakened to the potential risks of COVID-19, there has been an immense effort to add capacity to the healthcare system rapidly. This has rightly focused on adding acute-care capacity, providing ventilators, and building stocks of other critical medical supplies, such as personal defensive equipment. If this rush (combined with efforts to reduce the demand on the health system) can prevent health systems from being overwhelmed, mortality from COVID-19 will be suggestively lower. The development of clinically authenticated treatments could be a similar benefit, but the emerging evidence on that front is mixed, thus far.
Evolve the nerve center to plan for the next phase. Every assumption sustaining a business is open to question. To take one example, we might be in the focus of the largest drawdown in demand since the Second World War. The pendulum might not swing back fully once the outbreak has relented. Having experienced a new way of living, consumers are recalibrating their spending, increasing the likelihood that spending may permanently shift between categories and that online services could get adopted far faster. Decoding this new normal and confirming that the company has a strategy to navigate it is an important part of the work of a nerve center. Approaches such as using a portfolio of initiatives and planning for decision making under uncertainty can go a long way toward creating a compass for business leaders to follow.