This recession heatmap was first published in March 2019 and got its latest update on March 13, 2020.
Editor's note: Oliver Wyman is monitoring the COVID events in real time and we have compiled resources to help our clients and the industries they serve. Please continue to monitor the Oliver Wyman Coronavirus hub for updates.
Oliver Wyman introduced the Recession Heatmap in 2018 to help industrial businesses assess the likelihood of a recession in their respective sectors. Our Lead Indicator has the potential to signal a looming recession as early as 3 to 4 quarters before it hits, as backtesting on the 2008 recession demonstrates.
In 2019 our Lead Indicator again proved to be effective by predicting the downturn in many mechanical and plant engineering sectors, as experienced in Germany in the second half of that year.
While the Lead Indicator seemed to recover in Q4 2019, this changed with the outbreak of the COVID-19 crisis – first in China and then globally. In Q1 2020 it has turned dark red again. While the shape, length and depth of the coming recession is still unclear, companies need to prepare and implement appropriate strategies for optimization or transformation under different recession scenarios.
Click through the Recession Heatmap to view the indicators and the economic situation of the different mechanical engineering segments in Germany and the EU from 2006 until today. Come back and visit the Recession Heatmap as the COVID-19 crisis evolves – the Lead Indicator is a good predictor of recovery, too!