Peter Reynolds, Partner and Head of China, Oliver Wyman
For our team, we are ensuring that they have the required support and flexibility to deal with a very fluid situation. In some cases that has meant working remotely, including outside of the region. But in most it has been ensuring that the unique circumstances are understood and we manage around them (such as the need for child care with closed schools). For clients, we are helping them address the clear challenges across their supply chains, as well as planning for broader economic implications of the COVID-19 virus. Overall, though, we are taking a cautious but positive attitude – this too will pass, and once it does prosperity and growth will return.
We believe the Chinese economy is robust, and will be able to manage the direct hit from COVID-19. Hubei province, obviously, will be more severely affected. Overall, there will be a moderate impact of our baseline view on economic growth, although Q1 has always been a slower quarter. What we are more concerned about is the overall global economic implications if the virus becomes a pandemic. Global healthcare and government systems will not be as able to manage the outbreak as effectively as China. If this leads to a global slowdown, this 'second order' impact might be very significant for China given the global interlinkages.
The global nature of supply chains, with China at the heart of them, has been clearly seen in this period – with factories across the region needing to slow production as the 'just-in-time' supply of input parts became restricted. The importance of the Chinese consumer has also been striking, with luxury consumer goods manufacturers, as well as airlines, clearly feeling the direct result of Chinese restrictions on travellers. But overall, the period has been a further demonstration of the degree to which China is now truly embedded in the global economy.
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