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2.4 CLEM SUNTER’S GLOBAL FLAG WATCHING

At the beginning of March 2020, Clem Sunter positioned three scenarios in context of Covid-19 across the world. In addition to
the three scenarios relating to Covid-19, he also positioned a fourth scenario that provides an alternative outcome, given the
unprecedented set of circumstances the world faces.
Sunter’s scenarios are:

MUCH ADO ABOUT NOTHING

Although the medial flags raised over the course of the pandemic indicate that this scenario can almost certainly be discarded
as an indicator of the future, there are still people who believe that Covid-19 is just another seasonal flu that, left to itself, will
disappear like SARS or MERS. They argue that governments should implement a policy of “business as usual” in the economy.
However, Covid-19 is already demonstrating its long-term impact and may force us to reconsider our profligate lifestyle
and the way it perpetuates inequities across societies globally. Particularly, it shows that healthcare workers need as much
protection as soldiers sent to battle, as an unseen virus stirs up as much mayhem as a group of terrorists. Adequate defence
systems must be put in place to prepare the world for the new normal.

SPAIN AGAIN
A repeat of the Spanish flu, which killed 3 to 5% of the world’s population will remain a valid scenario until a vaccine is found.
Some aspects of the virus remain shrouded in mystery as asymptomatic cases, long-term side effects and the impact on
immune systems still vary significantly, with a lack of comprehensive data making predictions difficult. Until a vaccine is
available, the potential of a runaway pandemic should be a warning to leaders and policymakers who want to dismantle the
current measures of containment too soon.

THE CAMEL’S STRAW

The coronavirus does not have to kill millions of people to be the straw that breaks the camel’s back. The global economy was
already weak before the pandemic, in the midst of an ongoing trade spat between the world’s two largest economies (America
and China). In this context, a small disruption can collapse the global economy of the scale of the Great Depression in the
1930s: major cities’ streets deserted, small businesses reliant on daily cash flows closed down, large business’ operations on
care and maintenance, major sport events cancelled, empty churches and education institutions, multiple deaths in old age
homes and no international travel or tourism. Innovation to combat these impacts through social media, virtual meetings,
online entertainment options, but the food, medical, banking and other essential industries are operating as best they can –
with many workers on temporary leave or being retrenched, increasing unemployment figures. Global markets have gyrated
wildly but rallied in response to relief packages put forward by governments and central banks. In the face of a second wave,
many businesses may be shut down permanently due to liquidity constraints driven by heavily geared balance sheets. In
addition, governments may be less solvent because of the decline in tax when they must take on a huge amount of extra debt
to finance bailouts. Spectacular debt defaults are becoming a distinct possibility.

TIGHTROPE

Humanity becomes more cooperative to share in a positive impact on the destiny of planet earth, but we still live in a world
of enclaves, rising nationalism and leaders pursuing their own agenda. The virus has caused countries to become even
more inward-looking and self-sufficient. Yet the only way out of the mess is a shared strategy where nations learn from each
other. The tightrope scenario is about the delicate balancing act between preserving lives and livelihoods – the balance
between medical models on the potential evolution of the virus and the need to revive economies. Flexible policies must
enable different responses in different locations to respond to the uneven spread of the virus. As life adjusts to the “new
normal”, it is up to individuals, families, businesses, countries and the world to walk the same tightrope in synergy. There is
growing consensus among governments around the world that the acrobatic journey in this scenario should begin as soon
as possible. China, Austria, Denmark and New Zealand have already ventured forth on the tightrope. Others will follow.
Adaptation is the key to survival, to avoid the pitfalls of slipping into the Camel’s Straw and Spain Again scenarios.

SOURCE: CLEM SUNTER, SCENARIO PLANNER 2020
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