The buzz word of the season is ‘wave’. Most people knew to be prepared for a second wave of the coronavirus. Now it’s here, and the pandemic appears to be accelerating, as expected. What is surprising, however, is that there are many different waves in different parts of the world. The prevalence of the coronavirus, the limitations imposed to contain it and the supportive measures undertaken by governments will steer developments in the economy and the stock markets until a vaccine is generally available.
Global cross seas
Europe is experiencing the second wave of the coronavirus. France is recording more cases than in the spring, and Spain is following suit. In the United States, the first wave is weakening while China has been spared a second wave so far. Elsewhere in Asia, the first wave is gaining momentum. In Latin America, the first wave continues, strong as ever.
Overall, individual countries are going through diverse phases of dilution, acceleration or escalation. This creates cross seas that are felt throughout the world. Predicting how the waves will behave is extremely difficult. World statistics showing a steady increase in the number of COVID-19 infections eclipse a myriad of waves that differ from one another.
The key role of effective restrictions
The critical question now is how effective the targeted and sometimes drastic restrictions prove to be. Will the spread of the coronavirus be brought under control in order to ensure the sustainability of the health care system, and to ensure that the fragile economic development does not suffer new major setbacks? The support measures offered by central banks are already limited in effect, if not even a bit tedious. The central banks are buying more and more securities and making promises that extend over ever longer spans of time. Countries are heavily indebted and reluctant to launch additional measures.
The final push
The autumn and the coming winter will culminate in a running race. The coronavirus will continue spreading, but has it already weakened? We will know more about the effectiveness of the vaccines and the timetable for their introduction soon enough. We’re on the home stretch.
Will the vaccine arrive on time? Predictions about vaccine protection are getting more optimistic. Even so, the variation range is still extensive. According to expert estimates, a vaccine may be available to a limited number of people early next year. Several vaccines capable of being administered more extensively will probably be at hand in the latter half of 2021. However, the full efficacy of a vaccine is still uncertain in September 2020.
The autumn and winter will be characterised by news about the spread of the coronavirus, measures to contain it and government actions to support the economy. Let’s hope that the coronavirus has weakened. Let’s hope that the efforts to develop a vaccine are finally successful. Let’s be prepared for the eventuality that the spread of the coronavirus will erode the fragile economy. Let’s do our best to keep up demand until we have safely crossed the troubled seas.
The writer is VER's CEO Timo Löyttyniemi.
