PanamaTimes

Thursday, Mar 28, 2024

Time to Reset Expectations for World Economy With Virus Untamed

Time to Reset Expectations for World Economy With Virus Untamed

Investors banking on a coronavirus vaccine to save the world economy in 2021 need to temper their ambitions as scientists increasingly warn of a long and difficult road ahead.

While drug companies are making progress in the quest to find a cure for a disease that triggered the worst recession since the Great Depression, questions remain about how effective the first wave of vaccines would be, how easy they will be to distribute to more than 7 billion people and then how many will agree to take them.

The future for global growth relies on the answers to those questions as a new wave of the pandemic means health fears and government restrictions continue to inhibit daily life and commerce. Even when a successful immunization system does come along, it won’t be an instant economic panacea, says Chris Chapman, a portfolio manager at Manulife Investment, which manages more than $660 billion.

“In terms of actually getting back to pre-Covid or trend growth, it could take more than a year,” said Chapman. “The timing of the recovery will be delayed, but there is still expectation of a vaccine at some point next year.”

For decades, the world economy relied on central bankers and finance ministers to pull it out of crisis, on the basis that if you pump the right amount of money into an economy, a recovery will eventually follow.

This time is different, as investors look to scientists and data from vaccine and treatment trials for signs of hope just as much as they pore over stimulus plans coming out of Washington, Beijing or European capitals. The longer the hunt for an effective vaccine lasts, the weaker economic expansions will be.

To be sure, science could yet make major breakthroughs in the near term. If even only a small proportion of the population such as healthcare workers and the most vulnerable are immunized, that could make a big difference to the resumption of everyday life. Savings built up by households and businesses in 2020 could be unleashed in 2021.

Pfizer Inc. said this month it could seek emergency-use authorization in the U.S. by late November for its vaccine with German partner BioNTech SE. Moderna, another frontrunner in the race, is also looking at the possibility of an emergency approval this year if it has positive interim results next month.

Balancing Act


“There is a fair prospect that by the late spring, vaccines will be available in quantities sufficient to protect the most vulnerable groups,” said Neil Ferguson, an epidemiologist at Imperial College London, and former Covid-19 adviser to the U.K. government. “But at least until then, life will unfortunately remain a balancing act between reopening society and keeping the virus in check.”

Scientific hiccups may slow things down too. Johnson & Johnson paused clinical trials of its Covid-19 shot this month after a participant fell ill, weeks after AstraZeneca Plc and the University of Oxford stopped studies for the same reason. On Friday, both companies announced plans to resume their U.S. trials.

Effective treatments that would also help the economic recovery are also a mixed picture. Disappointing trial results this month for the much-hailed drug remdesivir from Gilead Sciences Inc. showed the antiviral treatment doesn’t save the lives of Covid-19 patients, despite U.S. President Donald Trump extolling its benefits. Still, U.S. regulators cleared the drug for use this week and Gilead has challenged the recent findings citing other positive results.

While there are hopeful signs from some antibody treatments being tested, the steroid dexamethasone is one of the only other therapeutics showing a meaningful benefit, and is aimed at people with very severe symptoms.

Even if an effective vaccine is discovered, the logistics of distribution will still mean disruption to work, travel and leisure will remain, with only a small subset of the population expected to receive a shot in the first instance anyway.

That all spells trouble for global growth, even as data in the U.S. and euro-area are likely to show this week that it rebounded smartly in the third quarter and didn’t collapse as much as once feared.

Long gone though is talk of a V-shaped recovery, as winter nears in the northern hemisphere -- and with it the risk the virus spreads more easily. Bloomberg Economics’s gauges of high-frequency data already point to a weakening of activity in many industrial nations in October, particularly those in Europe.

‘Very Precarious’


“The virus is creating a major element of uncertainty,” former Federal Reserve Chairman Alan Greenspan told Bloomberg Television last week. “Forecasting it is very precarious.”

Underscoring the pressure for an end to the pandemic is the knowledge economic scars are already forming. Among them: lost jobs, record debts, corporate bankruptcies, atrophying skills, missed investment, deglobalization, frayed mental health and rising inequality.

A recent study declared the U.S. economy alone will witness “large, persistent adverse effects” in the long term that outweigh the short-term hit in part because the virus means greater unease among the public.

“This did not start as a financial crisis but it is morphing into a major economic crisis, with very serious financial consequences,” World Bank Chief Economist Carmen Reinhart told Bloomberg Television. “There’s a long road ahead.”

Even in those parts of the world where the virus has been largely contained, consumers remain cautious. Chinese retail sales have only just begun to accelerate even though the most severe limits on movement were lifted months ago.

There is also the question of re-infection. Scientists have found it’s possible to get Covid-19 more than once, with a handful of confirmed cases globally. That presents another obstacle, which a vaccine may only partially solve.

There’s a high chance the coronavirus, like flu, could require regular shots to keep it at bay, meaning the virus could cast an even longer arc than already expected, cautioned Graham Medley, a professor of infectious disease modeling at the London School of Hygiene & Tropical Medicine, and member of the U.K. government’s Covid-19 advisory panel.

“If second and third infections are as infectious as the first infection, and the first generation of vaccines is not very efficacious, then it’s possible that Covid-19 will continue to be a major aspect of life into 2022,” he said.

Newsletter

Related Articles

PanamaTimes
0:00
0:00
Close
Apple warns against drying iPhones with rice
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
×