Two months back, we were all watching news on COVID-19 in China, without realizing that soon that same thing will enter our own home. With the world economy entirely wired, the travelers ensured carrying it to almost every corner of the planet.
Given the impact, this disease has created, we have tried to analyze the current situation and possible outcome for the disease.
The base case scenario suggests that COVID19 will impact the world till end of May 2020 in a major way. Its impact will reduce beyond that, with a significant risk of relapse until a vaccine is introduced
The overall confirmed cases on the Corona Virus are on the rise. This is driven by the following factors:
Factor 1:
The number of countries getting infected are increasing. Exhibit below shows the increasing number of countries infected due to virus:
Exhibit 1 – showing the chronology of number of countries, reporting 10+ cases of infection
As it suggests, the infection is spreading exponentially across the countries. This brings us to the second driver of the spread:
Factor 2:
The lifecycle of virus spread follows a path. It takes 4-5 weeks for its growth rate to slow down. Barring couple of countries like South Korea, Sweden, Japan and now China, no country is showing decline in absolute number of new reported cases (a lot of countries have shown decline in growth percent of newly reported cases of this disease; however, this gives a wrong notion as the base population of infected cases for such countries is already very high and absolute number of newly reported cases are not declining). Every other country is currently showing rise in absolute number of reported cases. Exhibit below shows two different examples of countries experiencing either a decline in new cases or rising number of new reported cases
Exhibit 2 – showing trend of new cases reported by countries
Building upon the logic above, we analyzed cumulative number of reported cases by vintage of time, when the countries crossed 10+ reported cases (we grouped countries by the date they got infected). It reflects a grim picture of the future outlook. It reflects that the disease is here to stay for more time.
As reflected in Exhibit 3, there is not even a single vintage that has started showing flattening of the reported cases (The only flattened curve is dominated by China). Newer vintages are anyhow expected to follow its older counterparts.
Exhibit 3: showing vintage analysis of cumulative infected cases by date on which they crossed 10+ reported cases
How the future looks like
For predicting the future, we used the Markov chain for modeling the spread of infection.
The weekly transition of infection rate varies from 0.87 to 7.96 (Which means every infected person passes on the COVID-19 to a respective number of people a week). This is derived from historical distributions of spread rate from other countries for which the data is available. The results were triangulated by the vintage analysis done in the previous section. The historical rates are used with smoothening to forecast future values.
This can be further improved by overlaying the lifecycle, vaccination and COVID testing facility available. The team could not perfect the model further, due to paucity of granular and reliable, time series data. Here is the outcome of the model:
We expect the disease to peak not before middle of May, 2020. By then, a lot of countries would come out of epidemic and would start recovering. The risk of relapse would still loom.
In our best case scenario we expect that the lockdowns, initiated by multiple countries, will result in the transition rate reducing significantly. We expect this can lead to total infections in the range of 1.5-2.0 million.
In our base case scenario for this period, the total number of people who are expected to get infected would be in the range of 7.5 million to 9.0 million
In our worst case scenario for this period, the assumption is community spread, i.e. our scenarios give more weight to higher infection pass through rate i.e. between 4.0 till 7.9 persons infected by every person. This infection pass through rate is simulated with higher probability. In this case, the total number of infections would be in the range of 22 million to 27 million people, globally.
By the time, this conundrum will settle, the fight for survival of already stretched economies will start. This needs another discussion.
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About the authors:
Abhishek Gupta –
Abhishek is the Managing Director of Sutra Management Consultancies. He focuses on big data strategic advisory and applications of Artificial Intelligence on business
Shravan Shrikrishna Potnis –
Shravan is a director in the UAE office of Sutra Management. Shravan focuses on enterprise risk management, governance and application of machine learning to make institutions smarter
Saurabh Assat –
Saurabh Assat is a senior project manager in the UAE office. He has delivered more than 200 modeling assignments and business unit strategy advisory across multiple domains like banking, governments, retailing and telecom