Guidelines For Updating Your Business Forecasts Post Corona

I’ve done my best to boil down all the info we have been analyzing the last 3–4 months into a tool CEO’s can use as part of their efforts to update forecasts.

The infographic below provides a guideline on how we expect G8 governments to phase in normal economic activity. We expect a variance of +/-2 weeks for the G8. G8 will likely prioritize the restart of services with the highest impact on GDP and the lowest public risk. The lowest impact on GDP and the highest public risk will resume operations last.

If your business category is not specifically listed, determine which quadrant it and those of your customers and suppliers will fit in. If you would like to resume operations sooner, work with government officials on a plan to comply with social distancing requirements. I cannot emphasize enough the importance of being proactive on the critical components of your supply chain. Some countries will resume operations later than others and sourcing new suppliers may be critical.

Core Assumptions
This forecast is based upon the current government and private industry publicly disclosed forecasts compared against the Chinese economic restart timelines.

Key assumptions include:

• A vaccine, or blend of treatments & testing that drive’s mortality rate down near flu levels, is ready in the October-December 2020 time frame.
• High-reliability instant virus test kits are not produced at >5% of the population per day prior to July. The current production is <100k per day.
• Governments continue to prioritize public health over the economy.
• International travel restrictions lifted in July.

An acceleration of this timeline would likely lead to another outbreak requiring a rollback of available services in specific regions. The US appears most likely to take this risk.

G8 Economic Ramp

Activity will not return to 100% capacity until we are through the recession. This will likely be 3–12 months from now depending on individual government actions. G8 government’s ability to shorten the duration and lighten depth of recession depends on their balance sheet capacity.

G8 nations balance sheet capacity from greatest to least:

1. US
2. Canada+Australia
3. Great Britan
4. Europe
5. Japan
6. China

For G8 nations 1–4, with a few industry-specific exceptions, you can likely conservatively pro-rate business revenue following restart against pre-corona baseline as follows:

Month 1–60%

Month 2–70%

Month 3–80 to 85%

Recession complete-100%

Keep a close eye on credit markets. We are dangerously close to a tipping point. Corporate, mortgage and sovereign debt are all at high risk of downgrades and default. Significant deterioration in this space would make absorbing the full impact of the recession challenging for all G8 nations and introduce additional downside risk to economic ramp timelines.

If you have any questions don’t hesitate to ask.

Note: Subsequent to our drafting this for peer review Bill Gates did this great interview validating our model. Nothing like being aligned with Bill’s thought process to give you a little confidence boost :)