May 26, 2021 | Axiory – COVID19 had a huge impact on the world in 2020. According to data from the IMF, the global economy contracted by 3.5%. Trillions of dollars were wiped out. Since then the world has watched and waited for a sign that things will be going back to normal soon.
Promise of a new day
That sign came on November the 9th when Pfizer and Moderna announced their vaccines had been over 90% effective during phase 3 studies. The impact on the markets was instantaneous. Both companies’ market cap tripled. The stock market set record highs, and by November 24th, the NYSE had set a new record by breaking past 30,000 points for the first time.
Pace of the roll out
Countries around the world are currently rolling out their Covid vaccinations, in a mass effort to get the world’s populations protected against the virus. Leading the charge is the US and the UK who are among the top ten countries on the leaderboard for most vaccinations distributed to their populations.
Both the UK and the US have vaccinated roughly the same percentage of people. In the U.S. 59 out of 100 people have received at least one dose while in the UK around 61 out 100 people have received their first dose. That’s ahead of the global average, which currently stands at around 11 out of 100 people.
The effect on UK & US economies
It's expected that the vaccine rollout will have a positive but gradual impact on economic recovery. If the US and the UK manage to vaccinate most of their populations by the end of 2021, it could mean a return to normalcy by Q1 2022.
It’s estimated that families in the US have around $1.6 trillion in extra savings stashed, due to the inability to spend these funds. Once the lockdown restrictions are eased, it will ensure that most of these funds are pumped into the economy, which will lead to a full-blown recovery.
Analysts predict that the UK will recover earlier than the US. The reason is the UK instituted some of the toughest lockdown measures of any economically advanced nation in January 2021. They did so to prevent the spread of the UK variant, and thus far, they’ve managed to reduce the number of deaths, which the US is still struggling with.
Impact of the global rollouts
Covid reminded us what an interconnected world we live in. It's clear now that the eradication of the pandemic globally will require every country's ability to manage the pandemic.
Predicting when that could be is challenging, mostly due to the big difference in the pace between vaccine rollouts in developed countries compared to developing nations.
That's why, the US and the UK may both experience a positive impact from their rollouts of the vaccine, however because of the deep trade links between them and other unvaccinated nations, they may not fully recover from the pandemic for years.
In general, the rate of vaccine rollout in the US and UK will have a positive impact on their economies, even if it isn't immediate. Trade ties will lead to lower exports to unvaccinated nations as well as a reduction in imports from these nations. Ultimately a slower rollout globally could hamper the recovery of the global economy.