Vaccine Optimism Not a Miracle Cure for the Economy- December 2020
The rollout of the Pfizer COVID-19 vaccine across the UK by next week has brought considerable pre-Christmas optimism around the world, as countries continue to vet the vaccine in preparation for wider distribution. With the capacity to inoculate 25 million by this year, the announcement has spearheaded a rapturous response in markets as the FTSE100 was pushed to 6186 points, the largest one-day gain since March. Nonetheless, financial positivity may not necessarily translate to economic recovery, as analysts have noted considerable challenges ahead in the return to pre-crisis normality.
Firstly, the distribution of the vaccine is tempered with logistical and transportation obstacles. Factoring in the timely process of producing the vaccine, this could mean community-wide inoculation may not be a foreseeable reality until late next year, curtailing a stronger economic rebound. In addition, the global nature of the pandemic has bred discussion over the parity of the vaccine's distribution, with the potential for richer countries to have wider and quicker access. The unequal allocation of the vaccine, a case described as 'vaccine nationalism', could create a two-speed global economy, as preliminary research finds slower immunisation among LDCs could come at a cost of $1.2 tn in GDP terms. Still, the vaccine is expected to aid economies substantially stability-wise, and as the Bank of England's chief economist Andy Haldane has stated, will help avoid the costly “prolongation of this stop-start cycling” between lockdown and reopening.