Scenarios for a post-COVID-19 world
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How will COVID-19 change the world? By this point, it’s clear there will be no V-shaped recovery, and no return to normal. The world will change, as it does after any social, geopolitical or economic event of this magnitude.
But how? A group at Deloitte Consulting and Salesforce teamed up to map out four fascinating scenarios, which explore not just the economic effects, but also the social, political, environmental and technological possibilities. A quick summary of the four:
1) Passing storm. Despite a bumpy start, the pandemic is met with an increasingly effective health system and political response. There is no “second wave.” The economy starts to rebound late in 2020, continuing to recover slowly until the second half of 2021, as confidence gradually returns. Social cohesion “is generally improved,” virtual learning and conferencing accelerate. Inequality is heightened, but trust in government rises, as does the ability to tackle other big problems like climate change.
2) Good company. The health crisis is prolonged, the economic crisis is prolonged, governments struggle to deal with it, but companies step up—putting “stakeholder capitalism” into action. Telecommuting and online education become the norm, innovation flourishes, and people embrace technology for its power to solve problems—a reversal of the “tech lash.” Trust in government falls.
3) Sunrise in the east. China and other East Asian countries manage the crisis more effectively than those in the West, and rise as the primary powers on the world stage. Western governments respond by enhancing government control mechanisms. Travel-related industries face extended decline.
4) Lone wolves. Rolling waves of the disease continue to rock the globe for longer than anyone was prepared for, creating widespread social unrest and leading to increased isolationism as well as growing government surveillance. Governments take more control over business life, and global environmental efforts are deprioritized as countries focus on food and energy independence.
I asked Andrew Blau, the managing director at Deloitte who led the scenario planning, which of these he thought most probable. “We are dealing with fundamental uncertainty. We’ve never seen a crisis like this. To assign probabilities seems irresponsible,” he said. Besides, “you are much more resilient if you are prepared for a range of possibilities.”
You can see full scenario descriptions here. And if you favor the more optimistic ones, be sure and read Erika Fry’s Fortune piece on how the private and public sector came together in Seattle to fight the pandemic. It’s quite a story.
More news below.
China's GDP contracted 6.8% in Q1—its first shrinkage in at least 28 years. So what stimulus measures are Beijing planning to roll out? The first round began in mid-February, and experts suggest round two could include the deployment of China's shadow banking system—credit lines kept off the books of official banks. Fortune
The Chinese data, which was anticipated to some degree, has not caused too much of a dent in market optimism. The markets seem to be buoyed by news about potential COVID-19 treatments, and the rather contentious prospect of the U.S. reopening its economy sometime soon. The Hang Seng was up 1.6% and the Nikkei 225 up 3.2% this morning, while the Stoxx Europe 600 had risen around 2.5% at the time of writing. As is often the case these days, U.S. futures appear roughly aligned with what's happening in Europe. Wall Street Journal
In an unprecedented move, Facebook will tell millions of users if they saw posts with coronavirus misinformation. The move—which has some observers asking why Facebook couldn't do this with other types of disinformation—follows the revelation by campaign group Avaaz that more than 40% of the coronavirus fake news on Facebook stayed there despite the company having been told the posts were false. Politico
French President Emmanuel Macron has warned that the EU political project may be doomed, unless its members pull together in the face of the coronavirus crisis. The early stages of the crisis have not demonstrated much of that comradery, with an every-nation-for-itself mentality taking hold. But now, after the likes of China and Cuba started stepping into the void with medical supplies, doctors and nurses, the European Commission is in apologetic mode and pledging to do better. Fortune
AROUND THE WATER COOLER
While countries such as the U.S., the U.K. and Italy are struggling to get financial support to businesses quickly, Germany is not having such problems. Why? Because Germany already had the mechanisms in place—it used them during the global financial crisis, and it's using them again now, to great effect. Fortune
Oil-rich Venezuela is running out of gas, to the extent that vegetables are rotting on farms and doctors can't get to work. The Venezuelan government has idled some of its oil fields, because it can't sell its crude thanks to sanctions and the plummet in global demand. Its refineries are crippled by a shortage of both spare parts and technicians—and Russia seems to have halted gasoline shipments to Venezuela, for now. Washington Post
Are contractions in GDP necessarily a bad thing? Some economists think not, as Eamon Barrett writes here. He notes that current government policies such as wage support and universal basic income come straight out of the degrowth playbook, and quotes economist Giorgos Karris: "In a situation like the current crisis, we really need to have an answer for how to manage an economy that doesn’t produce more than it did the year before for two years or, even, longer." Fortune
Website addresses ending with .org denote nonprofit organizations, so there has been huge disquiet around the sale of the .org registry to a private equity firm, Ethos Capital. Now the sale is on hold (again) thanks to the intervention of California Attorney General Xavier Becerra, who wants to preserve "an Internet that serves everyone" and fears the sale would put "profits above the public interest." The Register
This edition of CEO Daily was edited by David Meyer.