Can Vaccinations Alone Prevent Distress Amidst Businesses?

Written by Kunal Sawhney, CEO, Kalkine Group

The consequences of the Covid-19 pandemic, direct and indirect, are being felt by almost all the businesses, be it a large-scale enterprise or a recently incubated start-up, in various sectors.

Some businesses have faced direct heat from the falling sales and minimal trading activity in the recent quarters, on the back of countrywide lockdowns and several other restrictions put in place by the local authorities. While many enterprises have been indirectly affected by the lockdown curbs as travel restrictions imposed by countries on cross-border trades have taken a serious toll.

Extended disquiet

 The organizations that are largely dependent on exports and imports for generating a sizeable portion of revenues have been impacted. Business units in the United Kingdom involved in international trade have been widely hit post-Brexit, adjusting with the new obligations of the zero quota and zero tariff trading arrangement with the European Union.

Meanwhile, the partial ban on the movement of hauliers and goods carriers alongside the heightened checks on the posts with the bordering countries to the UK have brought down the size and scale of exports of the country.

It should be noted that the story is different for some other developed nations. For instance, China has once again emerged as the top trading partner for the United States, with the US exports to China rising nearly 17 per cent. According to the latest data revealed by the US Census Bureau, the net US exports to China in 2020 was at the highest level since 2017.

The dampened business activity among most of the local enterprises has substantially contributed to the sliding economic growth with lower-than-expected demand for most of the goods and services that used to command a meaningful position in the markets. The Covid-19 pandemic has affected business cycles at the core, with some of the enterprises failing to stay afloat even after the complete closure of units and monetary aids from the government.

Vaccine optimism

The hopes of economic growth are riding high on the global immunization programme with the availability of three-four regulatory-approved vaccine candidates. The optimism surrounding the vaccination drive has steered successive sessions of larger-than-usual gains in the capital markets with the investors going on a splurging spree for equities.

The crude oil prices hitting all-new 52-week highs has been one of the major indicators of a sharp bounce-back in the demand for crude and related products in the market. Clearly, it shows a revival in the number of air carriers operating in the countries and the spike in road traffic. Moreover, investors have now factored in the expected rise in the demand for crude oil in the near future as large countries prepare to reopen fully in the upcoming weeks.

Vaccination a final answer to Covid?

The advancement with regards to the Covid-19 vaccine development has certainly helped in reinstating confidence amidst business owners, salaried-class people and the individuals and sectors that were previously looking forward to a solution that can assist in reopening phase.

 

The countries have allocated substantial portions of their budgeted income towards research for better vaccines with relatively less chances of adverse effects for healthcare firms working to develop antibody treatments to save lives.

Businesses and industries that have previously faced the wrath of the Covid-induced lockdown systems are now anticipating a steep reversal in the offtake of products and services as nations reopen following a phased exit from the restrictions, while the healthcare authorities continue to enlarge the vaccination blanket every day.

The inoculation programme helps in alleviating the momentary pain from a high number of hospital admissions and the relatively high rate of daily infections. This, in turn, helps the businesses, as well as the government in the reopening process. With a controlled metric for the daily rate of coronavirus cases, the government is well-positioned to implement adequate restarting measures, ensuring the safety of people.

With the initial target of reducing the number of fatal cases to the later objectives of minimizing the rate of infection and immunizing everyone across nations, the Covid-19 vaccine has unquestionably helped in developing a roadmap for lifting of lockdowns, globally. Additionally, the vaccine has paved the way for reopening businesses, schools, recreational spots and other public gathering venues.

But vaccines certainly can’t catalyze a sharp increase in the purchasing capacity of consumers and the appetite for some of the products and services that were booming in the pre-pandemic period. The expanse and the magnitude of damage done by the pandemic has disoriented commercial functioning as well as the economies in a never-seen-before manner.

Many policy makers, experts, markets pundits and business magnates have adopted a cautious tone. The aftermath of a Covid-like grey-swan event is likely to be felt in the long term as the collective time to immunize each person on the globe is immensely high. Decreasing Covid-related cases to near zero is another challenge that healthcare authorities are facing.

Bringing back laid off individuals on the pre-pandemic payroll structure would again be a challenge as most of the provisionally unemployed people are meeting a considerable part of their periodic requirements with the help of monetary supports announced separately by state governments.

It will be worthwhile to witness whether the countries and the world on a whole manage to reach the anticipated rate of economic expansion in the upcoming years as suggested by leading think tanks, including the World Bank, the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD).

OECD and IMF have predicted that the global economy is slated to grow at a rate of 5.6 per cent and 5.5 per cent in 2021, respectively, whereas the World Bank, in January 2021, anticipated a revival at a rate of 4 per cent.

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