April 22, 2020
Stephen Rouatt, Signify’s Head of Strategy, Alliances and Market Insights, looks at the economic impact of the coronavirus pandemic
The spread of the coronavirus is having an unprecedented impact on the world. Obviously, the human cost, with more than 100,000 deceased, as well as the social and health impacts of this pandemic are extraordinary, but for the moment, I want to touch on the economic impact.
The global economy will recover from this, but first it will endure a significant short-term impact, which could ripple into 2021 depending on governments’ abilities to manage the spread of the virus.
Economists are currently forecasting one of the biggest hits to the world economy since the Great Depression. For 2020, markets have already seen slowing in Asia in Q1, but economists are now forecasting a very difficult Q2, as COVID-19 fully impacts Europe and the Americas. We are already seeing decreases in industrial production, jobless claims in the US hitting record highs, and our stock markets experiencing huge swings.
To understand and mitigate the impact on our business, we have teams in place working on scenarios for where the lighting market could be headed, and which of our segments would be most impacted.
This allows us to better anticipate long-term outcomes and provide guidance to our markets on how to respond.
We have been extremely proactive in dealing with this crisis, including moving our annual leadership summit to a fully digital format in mid-February, and instituting broad work-from-home measures where appropriate.
We withdrew our 2019 dividend proposal, significantly curtailed our indirect material spend, and instituted an external hiring freeze, among other measures designed to increase our resilience in the face of mass uncertainty. We are looking at what government support exists across our markets and which of those we can make use of. As well, we have requested our employees to adopt voluntary worktime reductions to help us better manage our costs, during a challenging Q2.
Additionally, we’ve established global and local crisis response teams that have been addressing crucial areas, coordinated by a central nerve center. These groups are working together to address immediate issues, as well as anticipating developments and identifying strategies to proactively address them. Importantly, we have regional and local teams in place to implement these measures and ensure our people remain well informed.
All this is going to help us closing Q1 and Q2 in the best way possible and position ourselves for a stronger second half in 2020.