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Home Stocks News A vaccine would not solve the crisis but would the result

A vaccine would not solve the crisis but would the result

The possibility of an effective vaccine against the coronavirus reduces the uncertainty about the duration of the health crisis. The economy may return to normal in a delimited time. This would be a radical change because the economic policy would regain its lost effectiveness, as households and businesses would no longer have any reason to keep a behavior expected.

However, the crisis has exposed and accelerated the structural changes that will shape the economy of tomorrow. These ruptures will create persistence, reducing the speed of adjustment of the economy.

We all know the recent news: a vaccine capable of being effective in 90% of cases has been developed by the subsidiary German BioNTech of the american laboratory Pfizer. This vaccine is found in a phase of large-scale test so that its use can be validated quicklyin the coming weeks, by the health authorities of US, Europe and other places.

The goal is to get a quick certification so that the vaccine can be produced on a large scale. Europe is finalizing the purchase of 300 million doses and the americans have acquired 100 million doses, with an option of 500 million additional doses.

It would take two doses per patient, so it is necessary to divide the numbers by two to get the number of those who could be immune. Pfizer has indicated that could produce 1,300 million doses in 2021the number needed to immunize 650 million people.

The vaccine would be a radical change because the economic policy would regain its lost effectiveness

The lab could make 50 billion in 2020. The technique used for this shot is original and allows to manufacture very quickly at a large scale. It is not necessary to ‘raise’ the virus to be able to inocularlos after, as usually occurs with the flu, polio or measles.

In the case of the new vaccine, this would involve the inoculation of strings of genetic instructions to send a signal to the cell about what to make to be able to contain the virus, the so-called method of the Messenger RNA. The principle is the same as in a vaccine classic for which you must train the immune system to recognize a virus (hence the advantage of inoculating virus in the vaccines), making it develop their proactive defenses to neutralize the real virus when it has infected the body.

The method here is the same, except that it is not a virus, even attenuated, which is inoculated, but threads of genetic instructions allow the cells to develop proactive defenses. Then it is necessary to define the characteristic of the virus to search for the immune system to locate. In the case of the Covid-19, it would be a specific peak in the form of the virus.

After these announcements, are at least three questions:

The first is the duration of the activation of these genetic mechanisms. Due to that the signal sent to the cells may have only a limited life.

The second is the effectiveness according to patient’s age. It seems that the data are not yet available. We can imagine different degrees of efficacy according to age.

The different waves suggest that the very shape of the health crisis is not well understood

The third question is that if we can make vaccines very quickly thanks to the technology developed, does your acceptance at a large scale will be spontaneous? It is not safe, the surveys conducted suggest a reluctance of the population.

Depending on the country and regardless of the technique used, the acceptance rate varies between 62% and 90%. The very particular way of the vaccine, the strands of genetic instructions, they could increase the reluctance and reduce the acceptance of the remedy.

On the other hand, it is worth assessing what impact has this news in the economic crisis. As we said, having a shot means having the possibility of putting an end to the crisis in a delimited time. Until now, the entire world has been witness to the development of this crisis trying to curb their consequences.

The containment, the working distance, the gestures of a barrier, or stopping of air transport, are all methods whose objective is to limit the spread of the virus in hopes of immunity collective, the exhaustion of the virus or the availability of a vaccine. The different waves suggest that the very shape of the health crisis is not well understood. As a result, its duration may be long, much longer than anyone would imagine.

While the end of the crisis will have little into account, by lack of accurate information, economic behavior is limited. The impact on the macroeconomy is then significant. This results in a saving behavior that goes beyond the norm by householdsthis is what we observe, thus limiting the demand addressed to companies.

These are reluctant to invest and renew their physical capital. In effect, if the crisis lasts and the demand is weak, what is the point to invest? An investment now if the crisis is prolonged in time it will lose its effectiveness.

The homes quiet will reduce their savings and businesses would invest

Therefore, there is the risk that the activity will decrease with time and limit their capacity for recovery in the future.

The existence of a vaccine would imagine that this crisis will end at a specific time. From this observation, it could all change. The economic policies that they know how to handle this type of situation by relaunching the activity. The homes quiet would reduce their savings and companies would invest.

However, even with the existence of a vaccine, it is unlikely that the economy will reverse their past trends. In eight months, the activity sectors have weakened, some never recover its appearance prior to the crisis, other sectors have been developed. These two contradictory situations will have to be combined.

This reallocation of resources is in the model of management of the current crisis and is the source of their persistence, since it is necessary to alter the production function of the economy. In the case of a vaccine, the process could be shorter and the response capacity of the economy, the greater. That would still be a good news.

***Philippe Waechter is head of economic research Ostrum AM (Natixis, IM).

Ryan Helton
Ryan Heltonhttps://etrendystock.com/
A Stock enthusiast since childhood, Ryan is known for his impeccable knowledge in the technology and gadgets niche. He has been working with eTrendy Stock as a contributor for most stock category and his articles are always well-researched and accurate.

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