IMF says that COVID19 may trigger Global Recession & Mckinsey report on COVID19 Economic Crises clearly indicates the impact of COVID19 on economy and infrastructure.
Let’s understand the situation and how businesses deal with COVID19 Global Recession and impact:
Starting with the IMF Managing Director Kristalina Georgieva’s statement today on COVID19 may trigger global recession and it’s impact on the entire economy as per them 2020 world growth would be below the 2.9 percent rate seen in 2019 but stopped short of predicting a recession. Trade wars pushed global growth last year to the lowest rate since a 0.7 percent contraction in 2009.
"The spread of the highly contagious COVID-19 respiratory illness caused by the coronavirus has drawn comparisons with devastating periods such as World War II, the 2008 financial crisis, and the 1918 Spanish flu."
On the same note Mckinsey shared its perspective on the COVID19 economic crises and global recession as per them demand suffers as consumers cut spending throughout the year. In the most affected sectors, the number of corporate layoffs and bankruptcies rises throughout 2020, feeding a self-reinforcing downward spiral.
The financial system suffers significant distress, but a full-scale banking crisis is averted because of banks’ strong capitalization and the macroprudential supervision now in place. Fiscal and monetary-policy responses prove insufficient to break the downward spiral.
The global economic impact is severe, approaching the global financial crisis of 2008–09. GDP contracts significantly in most major economies in 2020, and recovery begins only in Q2 2021.
How businesses deal with COVID19 Recession or COVID19 Economic crises to mitigate the impact on their businesses:
GET A BUSINESS COACH — It is critical for you to have a business coach to buck up with the competition and VUCA business atmosphere, a coach will help you to stay tuned and focused with the business and brainstorm with you to make new strategies and implementation to mitigate the risk of COVID19 economic crises and boost your business growth.
CONTINGENCY PLAN — Many top teams do not invest time in understanding what it takes to plan for disruptions until they are in one. This is where roundtables or simulations are invaluable. Companies can use tabletop simulations to define and verify their activation protocols for different phases of response (contingency planning only, full-scale response, other). Simulations should clarify decision owners, ensure that roles for each top-team member are clear, call out the “elephants in the room” that may slow down the response, and ensure that, in the event, the actions needed to carry out the plan are fully understood and the required investment readily available.
ENSURE LIQUIDITY — Businesses need to define scenarios tailored to the company’s context. For the critical variables that will affect revenue and cost, they can define input numbers through analytics and expert input. Companies should model their financials (cash flow, P&L, balance sheet) in each scenario and identify triggers that might significantly impair liquidity. For each such trigger, companies should define moves to stabilize the organization in each scenario (optimizing accounts payable and receivable; cost reduction; divestments and M&A).
SUPPLY CHAIN — Companies need to define the extent and likely duration of their supply-chain exposure to areas that are experiencing community transmission, including tier-1, -2, and -3 suppliers, and inventory levels. Most companies are primarily focused on immediate stabilization, given that most Chinese plants are currently in restart mode. They also need to consider rationing critical parts, prebooking rail/air-freight capacity, using after-sales stock as a bridge until production restarts, gaining higher priority from their suppliers, and, of course, supporting supplier restarts. Companies should start planning how to manage supply for products that may, as supply comes back on line, see unusual spikes in demand due to hoarding. In some cases, medium or longer-term stabilization may be warranted, which calls for updates to demand planning, further network optimization, and searching for and accelerating qualification of new suppliers. Some of this may be advisable anyway, absent the current crisis, to ensure resilience in their supply chain — an ongoing challenge that the COVID-19 situation has clearly highlighted.
CUSTOMER — Companies that navigate disruptions better often succeed because they invest in their core customer segments and anticipate their behaviors. In China, for example, while consumer demand is down, it has not disappeared — people have dramatically shifted toward online shopping for all types of goods, including food and produce delivery. Companies should invest in online as part of their push for omnichannel distribution; this includes ensuring the quality of goods sold online. Customers’ changing preferences are not likely to go back to pre-outbreak norms.
CORE TEAM — Employees and Core Team are the backbone of any company we need to sit with the core team and align them with the vision and mission statement to get the best out of them, this time is very crucial and we need 100 percent dedication and hard work from our employees so stay connected with them all the time.
BUSINESS NICHE OR IKIGAI — This is the best exercise for business owners to revisit the core of your company and start working upon their NICHE or IKIGAI to stay ahead from the competition and dominate the exact market segment to thrive globally with the right value proposition.
Business Growth Vs COVID19 Economic Crises
"If there’s one thing we have to make sure is our growth during this situation, so we can help humanity to survive, support our economy, system, nation and world ."
The impact on the economy will get recovered faster ones the virus stops, but businesses need to keep alert and follow the must do’s to avoid the major hit from the COVID19 Economic crises, it has been estimated that by 2021 the situation will get better and prosperous.