vaccine

Will A Vaccine Cure The Global Economy? The Answer Is Most Likely A ‘No’

The US Centers for Disease Control and Prevention has asked states to be ready to distribute a coronavirus vaccine by late October. Pfizer (PFE) thinks it will have enough data to ask the US Food and Drug Administration to authorize its potential vaccine next month.

Most experts think it’s unlikely — but not impossible — that a vaccine will be ready ahead of the US election. But with at least seven candidates in phase three trials, it’s very likely that at least one successful vaccine will emerge in the months to come. Pharmaceutical companies are also racing to develop effective treatments for the disease.

Why Will The Recover Be Slow?

An effective vaccine has been touted as the magic bullet that will allow the global economy to quickly shift back into gear. Yet there are reasons why the recovery may be slow going: vaccines are typically not 100% effective and there will be a limited number of doses to go around. Distribution could be a problem, both between countries and within them. Even if those challenges are overcome, some people may choose not to take the vaccine.

Neil Shearing, group chief economist at Capital Economics, wrote recently in a research note that there are a range of potential outcomes for economies once a vaccine is certified. And it would be wrong, he said, to assume that a vaccine will transform the economic outlook for next year.

The First Challenge Is The Vaccine Itself

“At one end of the spectrum lies a highly effective vaccine that is produced and distributed quickly. At the other lies a less effective vaccine that faces significant production and distribution challenges and would be in relatively short supply in 2021,” he said. “In most scenarios in between, it is likely that containment measures, including social distancing and restrictions on some foreign travel, will remain in place for the foreseeable future.”

The first challenge is the vaccine itself: The World Health Organization has said it would prefer a vaccine to be at least 70% effective, but it has set its minimum threshold for a Covid-19 vaccine at 50%. That means every other person who is vaccinated may still be at risk of an infection that would prevent them from working and spending money.

Supply – The Second Challenge

Supply is another important factor: According to Shearing, figures from developers suggest 1 billion doses may be available this year, with another 7 billion ready for distribution in 2021. But those numbers assume multiple vaccines are approved, and supply could turn out to be significantly lower. Specialized needles and syringes will be needed to administer the vaccine, but countries including the United States don’t have enough on hand. There’s also a global shortage of glass vials to contend with. The WHO does not expect widespread vaccinations until the middle of next year, a spokesperson said Friday.

Finally, many people are reluctant to take a vaccine: According to a survey commissioned by Deutsche Bank, only 61% of people in France say they plan to take a vaccine if one is certified in the next six months, while the same is true for 70% to 75% of Germans, Italians, Spanish, Brits and Americans. In Europe, only half of the population agreed that “vaccines are safe,” the bank said last week in a research note.

“From the perspective of the global economy the issue is not as simple as whether there is or isn’t a vaccine,” said Shearing.

Market insight: Biotech and pharma stocks like Moderna have soared this year on the promise of developing a potential vaccine, in part due to enthusiasm from retail investors. Those traders that have been snapping up shares on platforms like Robinhood could be burned if trials don’t pan out or distribution challenges emerge.

Shaheer Ansari

Shaheer is passionate about living a life seeking un-ending knowledge, philomath, as you may think of him. He's a student of Finance and a keen observer of Business and Indian-Political scenario who takes pleasure to pen down his views and opinions on the same. As his guiding mantra to life, ‘Come what may , life goes on’ helps.

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