News this week of an effective coronavirus vaccine gave hope for a speedy economic recovery and helped produce a stock market rally, but a vaccine isn’t an end-all cure for U.S. economic woes, according to Swiss investment bank UBS.
“Going forward, I’m not pessimistic,” Axel Weber, chairman of UBS, told CNBC. “I mean, eventually we’ll get through this. But we should not be under the illusion that it will happen fast. It will take some time.”
Weber predicts it will take at least a year to go back to pre-crisis levels of gross domestic product and another year or two to be anywhere near getting unemployment and pre-crisis growth back.
“So it would be quite a long recovery that we’re facing,” Weber added.
Many are hoping that the economy would quickly get back to normal after U.S. pharmaceutical giant Pfizer and German firm BioNTech announced that their coronavirus vaccine was more than 90 percent effective in preventing covid-19. Stock markets worldwide soared following the announcement.
The optimism around the announcement was tempered with a dose of reality, given the likely difficult logistics of mass production and transportation of a vaccine, particularly when time is of the essence in terms of saving lives and livelihoods.
“We’ve been waiting for some good news for some time now … And the latest news has been really taken well by the market. But you know, you have to take this with a grain of salt,” Weber cautioned.
Pfizer said that while some doses of the vaccine can be delivered this year (about 50 million worldwide) it needs more data on the vaccine’s safety before moving ahead.
“The disappointing part of the news was that the much lower-than-expected number of vaccinations that can be produced in a year, and if you look at the rollout that will happen, it’s going to take some time,” Weber said,
Goldman Sachs announced that it anticipates a “V-shaped” recovery that could be more robust than originally expected now that a vaccine appears to be within sight.
But like UBS, Goldman is still cautious. Its chief economist Jan Hatzius said the surge in the infection rate will be a driving factor in economic recovery in both the U.S. and in Europe.
Although the first quarter of 2021 is forecast to see a 3.5 percent increase in U.S. GDP growth as part of the economic recovery, the bank predicts that GDP will return to pre-pandemic levels during the second quarter. The original forecasts had been 7 percent, Pymnts.com reported.
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President Donald Trump tweeted that he believed the U.S. Food and Drug Administration and Pfizer waited until after the election to announce the positive vaccine news for political reasons. But according to Pfizer, it did not receive data from independent trial monitors until Nov. 8. The FDA had no hand in Pfizer’s decision to announce its early results.
“The hard truth: Science moves at its own pace,” The Associated Press reported. “While covid-19 vaccines are being developed at record speeds in hope of ending the pandemic, when they’re ready for prime time depends on a long list of research steps including how many study volunteers wind up getting the coronavirus — something scientists cannot control.”
Still, the vaccine has a long way to go. Developing a vaccine for a brand-new virus in less than a year is has never been achieved before, Science Alert reported.
