Global scenarios for COVID-19 proliferation

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Global scenarios for COVID-19 proliferation


Control Risks’ analysts assess that the proliferation of COVID-19 cases around the world could proceed according to the following scenarios, with a range of business, economic, security and geopolitical impacts.
 

Scenario 1/ Quick recovery

  • China continues to see a fall in new COVID-19 cases and succeeds in containing the spread of the virus by April.
  • Most production facilities in China are back in full operation by mid-May. Supply chains are reconstituted with no permanent disruption.
  • Transportation within – and to and from – China reaches pre-crisis levels by the end of Q2 2020.
  • Proliferation of new cases outside China is limited, quickly contained in specific geographies and does not significantly disrupt economic activity, with the exception of transport/tourism.
  • The number of new cases outside China starts falling in June (with some variations).
  • Major economies return to growth by the end of Q2 2020. Global growth in 2020 is reduced by a maximum of one percentage point.
  • Disruption to security and geopolitics is minimal.

 

Scenario 2/ Seasonal epidemic

  • Having contained the spread of the virus in Hubei province, the number of cases across China continues to fall, though more slowly than in the Quick Recovery scenario.
  • Disruption of production and supply chains in China remains significant in Q2 2020; recovery starts in late Q2/early Q3.
  • COVID-19 spreads more widely around the world, compounding the disruption of supply chains and transportation links.
  • The outbreak peaks in May and the rate of the spread starts to slow.
  • Disrupted supply chains and transport links mostly recover in Q4 2020 but 10%-15% of global supply chains are permanently dislocated.
  • Major events are likely to be disrupted until containment is achieved.
  • Global growth decelerates by up to three percentage points.
  • The security situation remains stable, though local law enforcement capacity declines.
  • Geopolitical implications are limited, with a noticeable loss of support for governments in only a few countries, including Iran, Italy and South Korea.

 

Scenario 3/ Uneven outbreaks

  • The global response effectively contains the spread of COVID-19 in developed economies by June 2020.
  • However, the outbreak continues to spread in less developed countries with limited public health resources and low administrative capacity to manage large-scale crises.
  • The total number of cases in parts of the Middle East, South Asia, Africa and South America approaches 1m.
  • Transport and supply chain disruption continues into 2021 with companies having to reconstitute 20%-30% of their pre-pandemic supply chains.
  • The spread of the virus starts slowing at the end of Q1 2021.
  • Global output declines by 3.5% to 5%, tipping the global economy into recession.
  • Global recovery starts in mid-2021 and is L-shaped, requiring significant fiscal stimulus to jumpstart growth.
  • The security situation worsens in affected regions: the likelihood of civil unrest rises and attacks against foreigners and foreign companies increase.
  • Geopolitical consequences are significant, with several cases of inter-state tensions and a spike in irregular migration to Europe.

 

Scenario 4/ Global pandemic

  • Pandemic spreads widely in both the developed and developing world.
  • Containment measures in most countries outside of China are not robust, and the number of infections continues to grow.
  • Infection growth rates are higher in countries with limited public health resources.
  • A vaccine becomes available only in Q2 2021 at the earliest.
  • By Q4 2020 more than 60% of global supply chains need to be reconstituted.
  • On-shoring of newly reconstructed supply chains leads to further fragmentation of global trade and rising protectionism.
  • The global economy enters a deep recession that triggers a wave of political crises, complicating effective global cooperation on an anti-crisis policy response.
  • The security situation in many troublespots worsens.
  • A prolonged pandemic and economic recession result in authoritarian and populist regimes pledging to contain the pandemic by closing borders.

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