McKinsey report: The global economy could shrink by 8% in 2020; Romania can record a GDP jump of 9% by 2040

The COVID-19 pandemic has been an unwelcome reminder of how much health matters for individuals, society, and the global economy. It has exposed deep vulnerabilities in both healthcare systems, people’s underlying health, social structures and economies worldwide. Early estimates suggest the pandemic and its repercussions could lead to a 3 to 8 percent drop in global GDP in 2020. Yet each year, poor health reduces global GDP by 15 percent. A new McKinsey Global Institute report explores what it would take to improve the health of the world’s population and how large the economic and societal benefits would be if premature deaths and disabilities could be reduced, and workers suffered fewer avoidable health conditions.

Prioritizing Health: A prescription for prosperity is the result of a year-long research effort across McKinsey & Company. The research analyzes 200 countries, including Romania over the coming two decades to 2040 to identify the different health challenges and opportunities facing each. The results are aggregated by regional and global levels and by levels of economic development. Highlights of the findings include:

• The pandemic and its effects could reduce real global GDP by as much as 8 percent in 2020. But each year poor health reduces real GDP by about twice as much.

• By making interventions that already exist today widely available, the global disease burden could be reduced by about 40 percent over the next two decades. The figures related to Western Europe, as well as the ones for Eastern Europe and Central Asia region reveal the same 41 percentage for 2040. The ones for Romania indicate that the estimated potential reduction in poor health is of 37 percent by this timeframe.

• A reduction of that size would bring tremendous benefits: an average 65-year-old in 2040 could be as healthy as a 55-year-old today. Infant mortality would decline by 65 percent, the health inequity gap would narrow, and 230 million more people would be alive by 2040. Further, for every person another 21 healthy days would be added annually at global level, while in Romania these would increase to 27 days. Better health could add $12 trillion to global GDP in 2040, an 8 percent boost that translates into 0.4 percent faster growth every year. Romania could benefit from a 9 percent GDP boost for the same timeframe and a $ 26 billion GDP impact over the next two decades. About half of these annual economic benefits come from a larger and healthier workforce. The remainder come from expanding the capacity of older people, people with disabilities, and informal caregivers to work as well as from productivity gains as the burden of chronic health conditions is reduced. In Romania, $ 11.5 billion, the largest amount, will be generated by expanded participation of the above mentioned categories, while almost $ 8 billion from fewer health conditions.

• The economic return could be $2 to $4 for each $1 invested in better health. In Romania’s specific case, every $ 1 invested will generate $ 1.8.

• The research shows that 70 percent of the untapped opportunity to improve health occurs before anyone seeks care. Approximately the same proportion applies also for Romania, with 36 percent potential reduction in poor health coming from environmental, social and behavioral measures, while other 35 percent from prevention and health promotion.

“Working-age adults in Eastern Europe and Central Asia could be better protected from lifestyle-related health issues. Within this region, top health risks are cardiovascular diseases and musculoskeletal disorders. In Romania, top two health interventions by impact should target the medicines for heart disease, stroke prevention, and diabetes, respectively vaccines, while the third as impact should refer to dietary interventions. We hope these findings will help change the often-dominant perception of healthcare as a societal burden and shift it toward an opportunity to improve both our individual wellbeing and our collective economic performance. By improving our healthcare we can partially offset the demographic decline under way in our country,” comments Alexandru Filip, Managing Partner at McKinsey & Company’s Bucharest Office and Leader of the firm’s Digital and Analytics Practice in Central Europe.

Realizing the benefits sized in this report would mean shifting spending to prevention within healthcare systems and beyond. Prevention of diseases is typically less expensive than treatment and reduces the need for more expensive treatment later on, contributing to a high economic return. Shifting incremental spending to prevention would not be simple, however, because it requires substantial changes in where and how healthcare is delivered, as well as changes to communities that would help individuals grow up, work, and age in healthy ways.

“In addition to existing interventions, the exciting prospects in innovation—in the form of new medicines, procedures, medical devices, technologies, and delivery models—will be critical to improve the health of the world’s population and could cut the disease burden by a further 6% to 10%, according to our research,” said Martin Dewhurst, senior partner and global leader, pharmaceutical and medical product practice at McKinsey & Company. The report identifies a range of technology areas with high potential for impact in the next twenty years across areas of high unmet needs.

“Even though our work highlights the large potential for improving health, that doesn’t mean achieving it would be easy,” said Katherine Linzer, a partner at McKinsey & Company and a lead author of the report. “For some countries, particularly emerging economies, it would require increasing access to healthcare. For all countries, it would require changing unhealthy behaviors and promoting healthy environments and societies. That’s not trivial and would require dramatic changes that extend beyond what we typically think of as healthcare.”

The report offers detailed recommendations for governments, business leaders, health care providers, and other stakeholders in four areas: invest in health in all aspects of economic and social policies; keep health on everyone’s agenda by advancing healthy and inclusive workplaces with a focus on older workers and people with disabilities; transform healthcare systems through closer connection with healthcare providers and engaging patients through digital channels (building on many successful experiments from the crisis); and double down on innovation in therapeutics and beyond.

The research concludes that the benefits of better health are too large to ignore: a $12 trillion economic opportunity, hundreds of millions of lives saved, and improved well-being.

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