The most discussed topic of 2020 is coronavirus known as SARS-CoV-2 that causes a disease called COVID-19. It originated in Wuhan, China but then spread around the world. With hundreds of thousands of confirmed cases, the infection is already reached the pandemic level, according to the World Health Organization.
While there are numerous tips and suggestions for individuals, we want to help enterprises, too. In this article, we will analyze the situation, compare potential outcomes, and show how businesses can protect their employees and supply chains from the coronavirus. Spoiler: different scenarios are possible, so keep a cool head now.
Facts We Know About the Virus
First and foremost, let’s look at the numbers. Different agencies monitor the outbreak but we like the interactive dashboard developed by the CSSE at Johns Hopkins University. According to the most recent information as of March 11, there are more than 120,000 confirmed cases with 4,300 deaths in total and over 66,000 recovered.
The majority of cases/deaths/recovers are registered in China and, particularly, in Hubei province. Apart from this region, Italy reported over 10,000 infection cases, Iran has 9,000, and South Korea – more than 7,700. Overall, the spread in China is slowing down while Europe and the USA feature faster transmission.
Here are two proven facts about COVID-19, officially:
- The reproduction ratio is relatively high. The number is between 1.6 and 2.4 which is higher than the seasonal flu, Ebola, and Zika. The coronavirus is transmitted from person to person with the tiniest respiratory droplets within a range of 2 meters.
- The virus is dangerous for elderly people. Various reports emphasize that death rates are the highest for older patients. For instance, the rate for people under 40 is just 0.2% but it surges to scary 10% for people aged 70 and over.
In addition, there are a few things under research right now. For instance, scientists still don’t know the extent of cases with moderate symptoms or without them at all. Asymptomatic infections aren’t fully understood yet. Finally, we don’t know if this particular virus is seasonal like other coronaviruses in humans or no.
Source: https://www.mckinsey.com/
Three Scenarios of COVID-19 Outbreak
As long as we don’t have a full picture of the virus and its spread, we can’t predict the consequences. Overall, there are three equally-possible scenarios that will have different results and impacts on the global economy. Let’s analyze them.
1. Quick Recovery
Assuming that COVID-19 is a seasonal disease with a flu-like fatality, we can expect a relatively quick response from healthcare. China is successful in combating the virus so other regions just should follow its path. Youngsters and adults will resist the infection while older people will stop various activities to protect themselves. Some local habits like washing hands may change but will not reach the survival stage and total isolation.
Expected economic impacts and results:
- China and Asia finish recovery by early Q2.
- Europe and the USA finish recovery by late Q1.
- Global GDP decrease by 12% to 32%.
- Other economies remain undamaged, generally.
2. Gradual Slowdown
This scenario is based on the assumption that the virus is seasonal but other economies still can’t repeat China’s success in control. Other regions will face more and more infections but keep them localized thanks to countermeasures like quarantines. Daily behaviors will change significantly, SMEs will face acute impact, especially in the developed economies. Among sectors, airlines, tourism, hospitality, and even energy will suffer the most.
Expected economic impacts and results:
- China and Asia finish recovery by early Q2.
- Europe and the USA finish recovery by mid Q2.
- Global GDP decrease by 40% to 60%.
- Hospitality and airline industries see great damage.
- Other sectors see high initial damage but recover by late Q2.
3. Global Pandemic
The least desired scenario is pretty similar to the global slowdown. Its main difference is the assumption that the new coronavirus isn’t seasonal. Due to this potential change, we will see a higher number of new confirmed cases in Q2 and Q3. National healthcare industries will have to find more effective countermeasures to keep cases/deaths low during the next waves of infection. Surely, this scenario will affect the global GDP even more.
Expected economic impacts and results:
- China and Asia finish recovery by Q3 due to new transmissions.
- Europe and the USA face generalized changes in behavior.
- Fall of customer confidence, may recover in Q3 or later.
- Great global GDP decrease, worldwide recession.
How Businesses Should React
As for now, the most urgent concern is the disruption of supply chains related to China. Manufacturers with plants in this country, resellers, shipment companies, business travelers – there are different types of agents who suffer losses due to COVID-19. There’s a more threatening issue. As the virus spreads to Europe and America, supply chains will break further.
There are a few ways for enterprises to respond. For instance, you can build feature-rich software for your organization to optimize delivery/shipment/customer service, mitigate risks, and minimize losses. Apart from such significant development, you can also take traditional countermeasures.
Thus, move through seven basic steps that can help your business to keep processes uninterrupted or avoid significant damage:
- Build a virus-focused team from different departments that will study, report, and react to the outbreak changes related to the company.
- Increase liquidity to ensure that your brand is prepared enough for different outcomes. It’s essential to survive during the recession.
- Protect staff by educating employees, providing protective equipment like masks, and helping with all the possible questions or issues.
- Simulate response activities by launching roundtables and other models. Test several assumptions to be ready for everything.
- Stabilize supply chains, optimize shipments and business partnerships with Chinese, European, and American entities.
- Support prevention efforts if your company can do it. Some businesses are already investing in the production of masks or educational campaigns.
- Understand your customers, focus on their needs in different scenarios to know how to respond. For instance, consider migrating your services/offers online.
Moreover, Bain has a special index called SITREP. It helps to identify the current level of danger, particularly, related to COVID-19. Now, the index suggests activating contingency procedures of the first level: restrict non-crucial trips, review the investment strategies, and prepare for a quarterly recession.
The Golden Rule
In conclusion, we want to share the final suggestion: keep calm. SARS-CoV-2 is a hyped virus and we don’t have a vaccine for it, correct. But we also don’t have a 100% working vaccine for all flu strains. That’s why it’s essential not to panic and follow basic protection rules. Stay healthy and keep your businesses healthy, too!
Finally, remember that our point of view isn’t the only true one. There are different studies and possible consequences so be sure to educate yourself.
