NEW YORK—The number of coronavirus cases continues to rise while the effectiveness of counter measures in large economies remains unclear.
China has demonstrated that containment is possible, but will the nation maintain it? And will other countries move as quickly to achieve a similar trajectory?
If the answer is yes, a three- to four-month scenario is likely to play out.
If the answer is no, there's always hope that containment could be aided by an external factor, such as a mutation that renders the virus less infectious or makes it seasonal. But we won't know if the virus is seasonal for nine to 12 months.
Unknowns and uncertainty abound, and New York-based management consulting firm Oliver Wyman offers these scenarios and insights as to how it all could play out.
If it lasts 3-4 months
In one scenario, new case rates that spike in a region would then level off within eight weeks because public health officials enacted early and aggressive containment measures and the public largely complies.
Norway, India and the Czech Republic are among the countries that have learned from the "playbook" set by China and have taken steps to contain localized outbreaks.
In China, aggressive measures that put 100 million people under quarantine in February (59 million remained so in early March) contained the spread within eight weeks of identification. New cases declined.
The firm said similar compliance would be necessary in the rest of the world to minimize the length of the pandemic.
Anticipated business impacts in this scenario include supply chain shocks reverberating into the second quarter in some sectors and earnings taking a hit.
However, a swift recovery with rebounding consumer confidence could allow companies to return to normal one to two quarters later.
A complete global recovery could take until the fourth quarter or longer if there are serial patterns of outbreaks and containment. Or, the recovery could be more rapid if the virus proves to be seasonal, according to the firm's study.
If it lasts 6-12 months
Several scenarios could extend the crisis for 6-12 months. In one case, some countries could take fast, aggressive action to contain the virus while others either cannot or do not. Some may lack capabilities to track and isolate cases, or to quickly build hospitals and related infrastructure.
In another case, some countries could see cases spike after initial containment because control measures were lifted.
Or, some countries might be unwilling to mount the same public health response as China.
In places with a slow response or poor compliance, case rates have increased beyond the expected six- to eight-week window, according to Oliver Wyman.
Under these scenarios, consumer confidence wavers into the second and third quarters. Vulnerable industries like tourism, automotive and manufacturing, and luxury goods reel from a drop in demand, and measures are required to stabilize balance sheets and ensure liquidity.
There could be a moderate to serious recession in impacted countries causing significant central bank intervention and the need for government support programs.
The supply chain shock would play out over six months before momentum builds and stabilizes for a recovery, the firm said.
Conversely, these scenarios could be mitigated if insufficient public measures are offset by some external factor that either decreases case fatality rates or helps reduce the spread. These factors could be seasonal, due to the discovery of an improved treatment or because the virus mutates and the pathogen's ability to infect or damage a host—its virulence—decreases.
After a year
There's not a lot of data to support scenarios more than a year out as of yet, according to Oliver Wyman.
Maybe a vaccine will be required to stop the disease. Many are under development but likely won’t be available for a year. Or, maybe the virus is seasonal and rises and falls by hemisphere.
Unless a region can contain its spike of cases for a long period of time, health systems will be overwhelmed like Wuhan, China, and Italy, causing fatality rates to increase.
If regions can't contain outbreaks and the virus spreads widely, it could affect 20 to 60 percent of the population in the next two years, according to Oliver Wyman.
Under these scenarios, a severe recession is possible, with a drop in demand caused by shaken consumer confidence and part-time and gig-economy workers having less discretionary income.
Vulnerable industries—particularly, travel, energy and hospitality—will require additional liquidity. And massive central bank intervention and government stimulus will be needed to protect vulnerable businesses and workers.