Just last week American company Pfizer and German BioNTech announced that their new corona-vaccine has proven to be effective and can be mass produced. With a 90% effective rate, at least testing has been successful. The vaccine still has to be approved by a number of organizations, but it certainly is promising. The financial markets responded immediately to the news. Stock prices of companies hit hard by the coronavirus like Heineken, Shell and KLM went up, whereas stock prices of companies like Just Eat Takeaway and Ahold Delhaize who initially profited off of the virus, dropped down again.
It has been no secret that the COVID-19 pandemic has taken a sledgehammer to our economy. In the sectors where risk of infection is high, like restaurants, cafés and entertainment, owners have had to close their business for consumers, taking a huge loss in profit. A vaccine would limit the risks and allow businesses to open up again. The vaccine will have a positive effect, but those positive effects will not be seen immediately. According to DNB president Klaas Knot, the coronacrisis will not be fixed overnight when there is a vaccine. In the short run, our expectations shouldn’t be too high.
This new vaccine will have a large effect in the long run, according to multiple organizations. The more people are vaccinated, the more our normal way of life can take up again. The current prediction is that Pfizer can produce 50 million doses by the end of this year, and another 1.3 billion doses in 2021. Every vaccinated person needs two doses of the vaccine, which effectively means 650 million people can be vaccinated by the end of next year. On a world population of estimated 7.5 billion, this is not nearly enough to create mass immunity. Achieving this will take a lot of time.
According to UBS chairman Axel Weber it would be at least a year to go back to pre-crisis levels of GDP and another year or two to be anywhere near getting unemployment and pre-crisis growth back. Later in the week, the initial positive movements on the financial markets softened again with a small decrease of the stock prices that shot up and a small increase in the stock prices that earlier dropped. This may also mirror the fact that the vaccine will take a while before it really starts being effective. For now, the vaccine mostly takes away a lot of the extreme uncertainty.