The current COVID-19 situation is highly volatile and its evolution will depend on a wide range of medical, social, legal, political and economical variables. Nevertheless, during this complex situation, everis wants to provide a point of view to decode main changing drivers and assess on how to manage restart.
This document contains everis point of view at the end of April 2020 regarding COVID-19 situation, and it does not contain any medical/safety recommendation, but an economical, social and managerial analysis on the situation and a set of general recommendations.
Global pandemic, similar pattern, different impacts
- Europe and North America add up 67% of worldwide cases while the firsts impacted regions (East Asia and Pacific) only 7%.
- After initial heterogeneous strategies, countries have converged to apply strict movement restriction and test control measures as knowledge and learning about the pandemic increases.
On the threshold of the biggest & deepest recession in 50 years
- Economic worst results in the last 50 years are expected as COVID-19 destruction power is higher than past crisis. Spain’s impact in GDP may reach -20% in Q2.
- A long-U-Shape or L-Shape recovery is expected since contractions over 4% of GDP have never recovered in a V-Shape.
- Economies cannot resist long business activity ceases due to its heavy impact on unemployment rates which have multiplied by between x4 and x6 due to temporary layoffs.
- Household expenditure will decrease and shift towards ‘Basic needs’. New consumer behavior changes will drive GDP evolution.
- Spain is expected to reach ‘Re-Start’ stage in June while the Government is pressured to start a lockdown de-escalation plan to minimize economic impact.
- Economies need to act considering multiple rebound scenarios. Vaccine, pharmacological prophylaxis availability, reaching group immunity or minimizing spread conditions drives everis to establish 3 economic recovery scenarios that will structurally hurt the economy according to everis’s crisis-GDP-recovery Database.
- 4 engines will progressively pull Spanish economy recovery: Internal consumption, internal & external tourism, efficient & agile public investment and exports.
CEO Agenda Recommendations
- New normal is an opportunity to gain competitive advantage by rethinking business models, reshaping companies and resizing resources to better compete in the post-COVID19 normality.
- Business strategies need to be reconsidered to enable different recovery and future scenarios.
- Design and implementation of Business Continuity Plans may alter the status quo in order to ensure flexible and agile operations
- Market contraction, competitive increase and changes on consumer behavior force companies to review its commercial approach considering new channels, sectors, products and services to regain market share.
- Organizations have to be transformed, opening them to new external talent reaching network thinking and developing 3rd party relationships.
- Embrace new technologies and empower its implementation as “back to pre-covid” is an illusion.
Decoding COVID-19 in Spain: Keys to managing restart