The COVID-19 pandemic is delivering a massive shock to the global economy. Finding and delivering appropriate responses is made all the harder by the considerable uncertainty about the trajectory of the virus and the measures needed to ensure that economies can reopen safely. Nevertheless, executives can begin now to prepare their companies for the “next normal.” In this McKinsey Live webinar, held on June 3, MGI partner Susan Lund and senior partner Bob Sternfels discussed the global economic outlook and how leaders can begin navigating to what’s next. Their main observations included the following:
The impact of COVID-19 on GDP growth will be governed by two main factors. These factors are the spread of the virus and the public-health response, and the economic effects of lockdowns and other economic-policy responses. In the best-case scenario envisioned by McKinsey, the public-health response contains the virus and strong economic-policy responses prevent structural damage to the economy and restore pre-pandemic fundamentals and momentum.
Global executives express considerable uncertainty about how long their economies will take to return to precrisis levels. Surveys conducted by McKinsey in April 2020 and May 2020 indicate that executives have a wide range of views about which economic scenarios are most likely. High uncertainty makes it challenging for business leaders to make reliable plans for investment and impedes economic recovery.
Workers in the United States have felt the economic impact of COVID-19 and public-health measures such as lockdowns. Some 40 million Americans applied for unemployment from March 15 through the end of May. MGI research published in early April showed that a nationwide shutdown could leave up to 36 percent of the US workforce—57 million jobs—vulnerable to reduced hours, furloughs, or layoffs as a result of lockdowns.
To come back stronger in the “next normal,” companies should reimagine their business model. There is much that companies can do to prepare for the challenges—and opportunities—of the next normal. Four strategic areas merit special focus: recovering revenue, rebuilding operations, rethinking the organization, and accelerating the adoption of digital solutions.