There has been only limited progress made in countries that have implemented a partial lockdown this winter. This means that unless the widespread distribution of the vaccine begins, we do not forecast an appreciable decline in new cases without a full lockdown.
FORECAST FOR 2021
1. The vaccines being developed and now deployed by Pfizer/BioNTech, Moderna, and Astra Zeneca/Oxford appear to be the best hope of combatting the pandemic in the short term. We cannot say for certain if there are longer-term adverse impacts from the vaccine, or whether the virus will mutate or not. But as a public health response, this is presently the only rational hope for a return-to-normal scenario.
2. We do not believe enough of the vaccines will be distributed within 2021 to make a significant difference in terms of returning to “normality”. Still, this is the first step to a recovery, assuming the vaccine works and the virus does not mutate.
3. We know that the virus spreads through aerosol and liquid distribution. Therefore, we can understand that prudent policy measures against its spread include personal distancing; using face masks and possibly gloves; avoiding crowded spaces and spaces such as restaurants where being without a mask is impossible. We can infer that cities which are more congested in terms of public transport, large building blocks, frequently-used elevators and escalators, and enclosed spaces with poor fresh air circulation are all environments where the virus can spread rapidly.
4. Given (2) and (3), we believe that the first 5 months of 2021 will see high incidents of new cases, absent a real lockdown. We do not believe the partial lockdowns are effective because the rate of
5. New hope will return around MayJune as the summer season kicks in again. However, the continuing problems seen mean that tourism destination countries such as Cyprus or Greece will be lucky to receive more than 35-40% of 2019 arrivals. This is still well below break-even capacity. Nevertheless, the summer of 2021 offers the first hope of a resumption of normal life, at least for a limited time.
6. The long disruption in normal business operations means that many more enterprises will close in the first half of 2021. The only mitigation against this will be further public spending.
7. Operations in October – December 2021 will depend on the progress of vaccine distribution and public health measures still in place. We do believe that maintaining strict measures will be politically impossible given population fatigue. We will probably hit a Fourth Wave then.
8. From the summer of 2021 onwards, the focus will increasingly return to public debt and macroeconomic stability, and the economic progress of at-risk countries such as the United States, Greece, Italy, France, and others will be re-assessed with a new eye. There should be, hopefully, a strong growth resurgence in Q2 and Q3 2021 to avoid threats of a serious public debt meltdown. The long-term trends, however, are unpalatable.
Philipp Ammerman
Financial consultant, Director Navigator Consulting Group Ltd
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