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Scenario #3 – Persisting into third quarter, escalating recession risks: The outbreak’s global disruption continues to spread into the third quarter, encompassing all the large economies. China faces a renewed rise in new cases as it restarts production. The extended disruption to economic activity damages corporate profitability and brings about a rise in corporate credit risks and significant tightening in financial conditions, which exacerbate the slowdown in global growth. Central banks will embark on a renewed easing cycle, with the potential for a coordinated response. In this scenario, we expect the global weighted average monetary policy rate to dip to its lowest level since 2012. The Fed would extend its cuts from March-June and could become more aggressive and take rates to close to the lower bound by the third quarter. The fiscal response across key developed and emerging economies also becomes more aggressive, with China taking up two percentage points of fiscal expansion. The cyclically adjusted primary fiscal deficit for China and the G4 nations (Brazil, Germany, India and Japan) widens to 5.1% of GDP in 2020, from 4.1% in 2019. Global growth stays weak (i.e., below 2.5%) between the first and third quarters.

Just how bad will the new coronavirus be? I can’t answer that question, but I have observed the debate splitting into two broad camps: Call them the “growthers” and the “base-raters.” The term growthers refers to the notion of exponential growth, and indeed the number of Covid-19 cases appears (by some accounts) to be following an exponential pattern. Some scientists have estimated that the number of cases doubles about every seven days. If you play that logic out, it is easy enough to see how people might be complacent at first, then in a few months there is a public health crisis . . . the growthers find it easy to imagine that the number of cases might overwhelm the capacity of the U.S. health care system. Even if you think a speedy American (or more likely Singaporean) response argues against this scenario, it is harder to be equally sanguine about all the world’s nations, most of which are much poorer and have lower-quality public health systems than the U.S.

We need to be careful. Spanish flu — you know, that disease that killed millions of people — had several waves. The first wave killed mostly older people and children, with almost no young or middle-aged adults getting too sick. The second wave absolutely destroyed even healthy people. It would kill people within 12 hours sometimes. Often they’d get symptoms around breakfast, and be dead by dinner.

Today, Gilead abruptly announced that it would no longer provide emergency access to remdesivir, telling the New York Times that “overwhelming demand” left it unable to process requests for the drug through its compassionate use program. Hours later, the FDA gave the drug orphan status . . . The distinction could severely limit supply of remdesivir by granting Gilead Sciences exclusive protection over the drug and complete control of its price. Other pharmaceutical firms, including India-based pharmaceutical firm Cipla, are reportedly working toward a generic form of remdesivir, but patients in the U.S. could be prevented from buying generics with lower prices now that Gilead Sciences’s drug has been designated an orphan.

We need a consistent nationwide approach to shutting down. Despite urging from public health experts, some states and counties haven’t shut down completely. In some states, beaches are still open; in others, restaurants still serve sit-down meals. This is a recipe for disaster. Because people can travel freely across state lines, so can the virus. The country’s leaders need to be clear: Shutdown anywhere means shutdown everywhere. Until the case numbers start to go down across America — which could take 10 weeks or more — no one can continue business as usual or relax the shutdown. Any confusion about this point will only extend the economic pain, raise the odds that the virus will return, and cause more deaths.

To bring the disease to an end, we’ll need a safe and effective vaccine. If we do everything right, we could have one in less than 18 months — about the fastest a vaccine has ever been developed. But creating a vaccine is only half the battle. To protect Americans and people around the world, we’ll need to manufacture billions of doses. (Without a vaccine, developing countries are at even greater risk than wealthy ones, because it’s even harder for them to do physical distancing and shutdowns.) We can start now by building the facilities where these vaccines will be made. Because many of the top candidates are made using unique equipment, we’ll have to build facilities for each of them, knowing that some won’t get used. Private companies can’t take that kind of risk, but the federal government can. It’s a great sign that the administration made deals this week with at least two companies to prepare for vaccine manufacturing. I hope more deals will follow.

The study, sponsored by the New York state Department of Health, looked at about 600 patients at 22 hospitals in the greater New York City area. Those who took hydroxychloroquine, with or without the antibiotic azithromycin, were no more likely to survive their infections than those who did not.