COVID-19 could drive down U.S. gross domestic product by eight to 13 percent, according to McKinsey & Company

A well-known management consulting company has laid out two economic scenarios as a result of the COVID-19 pandemic.

In an 87-page report, McKinsey & Company says that if the coronavirus is contained, the U.S. gross domestic product could see an eight percent decline in 2020. But it would climb back by the end of the fourth quarter of 2020.

This more positive scenario envisions a reduction in case loads driven by "virus seasonality combined with a stronger public health response". It also assumes that China and East Asia would continue their current recovery, controlling the virus early in the second quarter.

In addition, this forecast is based on the coronavirus effectively being controlled in Europe and the United States between two to three months after the economy had been shut down. New cases would peak by the end of April and decline by June.

"In Europe and the U.S., monetary and fiscal policy would mitigate some of the economic damage with some delays in transmission, so that a strong rebound could begin after the virus was contained at the end of Q2 2020." the report states. "Most countries are expected to experience sharp GDP declines in Q2, which would be unprecedented in the post WWII era."

The more devastating economic scenario forecasts a 13 percent decline in U.S. GDP this year.

According to McKinsey & Company, this could occur if the coronavirus spreads globally without a seasonal decline, which would overwhelm health systems in many countries.

This scenario also assumes that China would be forced to clamp down on regional recurrences while the U.S. and Europe would continue requiring physical distancing throughout the summer.

Under this grimmer scenario, China's economy would be hurt by falling exports, forcing "a potentially unprecedented contraction".

"The United States and Europe would face a GDP decline of 35 to 40 percent at an annualized rate in Q2, with major economies in Europe registering similar performance," the report states. "Economic policy would fail to prevent a huge spike in unemployment and business closures, creating a far slower recovery even after the virus is contained. Most countries would take more than two years to recover to pre-virus levels of GDP."