Covid-19 shock to lives, livelihoods the biggest in a century: McKinsey

The consultancy group said the aerospace/defence industry and the air/travel industry will take the longest to recover and could well stretch into the first half of next year.

The six sectors hit hardest by shutdowns and disruptions due to the Covid-19 pandemic may not see a restart until 2021, an analysis by the global consultants McKinsey has said.

Relatives cry on the grave of coronavirus victim on the outskirts of Herat province west of Kabul, Afghanistan. (AP)

The consultancy group said the aerospace/defence industry and the air/travel industry will take the longest to recover and could well stretch into the first half of next year. But it won’t be easy for others either. The economic shock of coronavirus would be huge. In the US, it said, the impact could exceed anything seen since the end of World War II.

“Nothing is going to be the same. This is a new normal, a different way of operating,” McKinsey global managing partner Kevin Sneader told news channel CNBC.

“I think for our clients, they’re worried about their employees, their customers, and cash—in that order. And they are worried about cash,” he said.

The shock to our lives and livelihoods from the virus-suppression efforts could be the biggest in nearly a century. In Europe and in the United States, the required ‘lockdowns’ of the population and other efforts to control the virus are likely to lead to the largest quarterly decline in economic activity since 1933.

In a series of reports outlining the challenges and road ahead for countries and companies, the group called for action across five stages from the crisis to the new normal that will emerge after the battle against coronavirus has been won: Resolve, Resilience, Return, Reimagination, and Reform.

“It may take years to recover from production and supply chain stoppages, due to critical vendors located in areas impacted by the virus. Long order backlogs mitigate some concerns, though rapid adoption of remote work technologies may put a dent in high-profitability business travel,” the report noted.

The group has also cautioned companies against only looking at the short term. Immediate and effective response is vital but the longer-term dimensions are even more critical. Recession may set in. The disruption of the current outbreak is shifting industry structures. Credit markets may seize up, in spite of stimulus. Supply-chain resilience will be at a premium, the consultancy group said.