Yazar: Geoffrey Smith
Investing.com – A year has passed since China reported its first death from Covid-19. Although the common mind says that we have left the worst behind, it is becoming increasingly clear that even mass vaccinations cannot quickly return the world to a pre-pandemic.
Yes, vaccinations are happening all over the world. Pfizer (NYSE:) ve BioNTech, Modern (NASDAQ :), AstraZeneca (NASDAQ :), and drugs from China and Russia research laboratories have been approved. Phase 3 results of Johnson & Johnson’s (NYSE 🙂 experimental drug may come this week, according to various reports.
However, deployments are progressing rather slowly in some regions, especially in the EU. At the time of writing this news, less than 2% of the population has been vaccinated. While this rate is 10% in the UK, it is the best in class, and 40% in Israel. Even its rapid launch in the UK is the product of a cost-effective gamble to extend the two-dose vaccination for longer than clinical trials. While AstraZeneca says it should at least not be, no one knows if the vaccine will reduce its effectiveness.
At a time when new and more infectious strains of the virus arrive on the continent, slow vaccination is already leading governments to tighten the quarantine regime and economists to revise their forecast for growth this year. France will announce its third nationwide quarantine this week, the government approved on Monday. Business confidence in Germany dropped to an eight-month low in January, according to the think tank IFO.
At the press conference, European Central Bank (ECB) President Christine Lagarde said, “Production is likely to decline in the last quarter of 2020 and the intensification of the epidemic poses some downside risks to the short-term economic outlook,” hinting at a double-dip recession for the euro zone.
In Japan, the government has had to reject reports suggesting that it has already abandoned its hopes to organize the already postponed Summer Olympic Games in Tokyo, which is still under a state of emergency due to the epidemic.
It seems that even the vaccine is not a cure for all your troubles. While undoubtedly strengthens the immune defense, only time will tell how much it maintains immunity and suppresses people’s ability to spread disease. And the vaccine race continues to suffer from its disappointments: Institut Pasteur of France and the US pharmaceutical company Merck gave up their efforts to develop vaccines Monday after their experimental drug failed.
All this disrupts the optimism felt in the last days of 2020, when the prospect of another year of government incentives and expansionary monetary policy nurtured the hopes of a fast and more or less synchronized global economic recovery. Most people expect the International Monetary Fund (IMF) to lower its forecast for world growth in its World Economic Outlook, which it will update on Tuesday.
The main concern of recent days is the local outbreaks in China that have led to the quarantine of tens of millions for the first time in months – a setback for someone who has recovered from the initial outbreak shock.
Official advice against home travel for the Lunar New Year last week was one of the main reasons for selling prices (although the market feels comfortable due to the discipline shown by major manufacturers in the Persian Gulf and the former Soviet Union).
Of course there are clear developments to be seen. In recent days, new infection rates and hospital admissions in the USA have decreased significantly, allowing home-stay measures to be lifted in the state of California. Restaurants from Baltimore to Chicago reopen their doors for indoor dining, with only 25% capacity, of course. On Monday, Moderna said that her vaccine was really effective against two new strains detected in the UK and South America (though she will still be working on a new booster vaccine for the South African variant).
The new administration of the United States has moved quickly to destroy a swift victory speech: travel bans and quarantines will be tightened for those arriving in the United States. Business and family concerns will continue to put pressure on economies to reopen, and as Ian Shepherdson, chief economist at Pantheon Economics, argues: “Every step towards re-opening before Covid-19 is over will delay the realization of herd immunity and therefore cost many lives that could be saved. it will be.”
To be sure, governments make such choices every day on issues completely unrelated to Covid-19. When the recent increase reaches its peak and the pressure on hospital capacity decreases, the beginning of the end must appear on the horizon. But the constant pressure to reopen raises the chances that progress after the outbreak will be uneven and risky.