Vaccination chaos undermines world economic recovery
Wrong approach to priority groups fuels scepticism over policies in US, EUIvan Mastagarkov
Optimism over the launch of the first Covid-19 vaccine has almost faded away as the practical process of administering it met unexpected difficulties. The US was the first to rush mass vaccination plans aimed to halt the pandemic spread. However, those plans were very soon overshadowed.
The planned drive-in vaccination has not even started. A large number of hospitals received millions of doses that remained unused. Reports about some 10 million ordered but unused vaccines raised tension waives over the overall management of the crisis in the worst affected country. Health officials and state governors threatened vaccine wasters with severe punishment measures.
Britain, which has been forced to impose a new quarantine, has found itself in even deeper chaos. The country is the leader in licensing Covid-19 vaccines, but the local health authorities failed managing the process. Vaccines are administered by two shots, separated by 3-4 weeks. However, the UK decided against the recommended usage to administer only one shot per patient and greatly delay or even miss the second shot. The British approach is aimed at reaching more people with some vaccination rather than securing total protection, as prescribed, for fewer people. The approach seemed to make sense only to UK health officials as medics and pharmaceutical companies have warned that partial vaccination does not have the same intended effect.
In Europe the campaign of the EU was ambitious but again wrongly managed. Badly hit France reported the launch of mass vaccination with … 500 vaccinations due to bureaucratic barriers. Germany wanted to launch quickly the process and even secured several centres, but they were left with no vaccines and had to be shut. Germany had vaccinated nearly 317,000 people just over a week into the campaign. Health Minister Jens Spahn, who has faced criticism from inside Germany's governing coalition, has repeatedly said that vaccinations are progressing as expected and that the slow start is because teams are first going to nursing homes to vaccinate the most vulnerable. Merkel said she thinks Spahn is doing “a great job”. That's a better showing than in several other EU countries, but critics have pointed to faster progress in the UK, the US and Israel.
In Russia, the locals have shunned the government plans for mass vaccination while China reported disappointing results of the country's first vaccine.
The stock markets across the globe had to retreat from previous highs pumped by vaccine related optimism. US stocks dropped pulling back from record highs in the first trading day of the new year as coronavirus cases surged.
With the lag between a full vaccine rollout and a global economic recovery, investors will count on central banks to keep money cheap.
The new year was meant to usher in greater certainty, with Covid-19 vaccination efforts ramping up and the US election in the rearview mirror.
Instead, investors are being forced to grapple with fresh lockdowns. The main concern was related to overall approach to promoted early vaccine focus on elderly people. Almost all campaigns have started with nearly 100-year-old patients being vaccinated - approach that proved to be totally wrong, and surprisingly the one country that in fact chose the right path was Indonesia. As the country prepared to begin mass inoculations against Covid-19, its plan to prioritise working age adults over the elderly, aiming to reach herd immunity fast and revive the economy, will be closely watched by other countries.
Indonesia, which plans to begin mass inoculations with a vaccine developed by China's Sinovac Biotech, says it does not have enough data yet of the vaccine's efficacy on elderly people, as clinical trials underway in the country involve people aged 18-59. “We're not bucking the trend,” said Siti Nadia Tarmizi, a senior health ministry official quoted by Reuters, adding that authorities would await recommendations from the country's drug regulators to decide on vaccination plans for the elderly.
Professor Dale Fisher from the Yong Loo Lin School of Medicine at the National University of Singapore said he understood the rationale of Indonesia's approach. “Younger working adults are generally more active, more social and travel more so this strategy should decrease community transmission faster than vaccinating older individuals,” he said. “Of course older people are more at risk of severe disease and death so vaccinating those has an alternative rationale. I see merit in both strategies.” By vaccinating more socially mobile and economically active groups first, Indonesian government officials hope the country can quickly reach herd immunity. Budi Gunadi Sadikin, Indonesia's health minister, said the country needs to vaccinate 181.5 million people, or roughly 67% of its population, to reach herd immunity, and requires almost 427 million doses of vaccines, assuming a double-dose regimen and a 15% wastage rate. Economists have argued a successful vaccination programme covering around 100 million people will help jumpstart the economy, as they are more likely to resume economic activity such as spending and production.
Last but not least, investors will closely monitor the pace of economic growth and corporate earnings, as they do every year. However, with Covid-19 cases spiking nationwide and many states instituting broad shutdowns again, it may be more difficult to forecast these trends in 2021.
Consumers worldwide could unleash some pent-up demand for spending on goods and services once there is a vaccine, in the second half of 2021, but the emphasis will be on signs for long-term changes in a post-pandemic world - such as whether consumers focus more on saving than spending, thereby contributing less to GDP. Personal consumption spending currently represents nearly 70% of US GDP, but if Americans become more savings oriented in the new year, there could be some long-lasting changes.
European markets, however, were slumping as panic sparked by the discovery in Britain of a new variant of the virus that causes Covid-19 overshadowed a final agreement in Washington of a new financial relief package.