Opinion |

Sorry, a Vaccine Isn’t Quite the Light at the End of the COVID Tunnel

It’s supposed to be an economic panacea, but that assumes it’s distributed optimally and enough people agree to be inoculated

David Rosenberg
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David Rosenberg

In these dark times, it seems everyone badly wants a light at the end of the tunnel of serial lockdowns and economic distress. The vaccine seems to be it. Since Pfizer and Moderna announced they had successfully developed vaccines, Wall Street has been acting as if the coronavirus is already behind us. Many – though by no means all – economists think widespread inoculation will enable the world economy to resume growth in 2021.

Back at home, the vaccine optimist-in-chief is the prime minister. Benjamin Netanyahu not only seems to have jawboned Pfizer into allocating Israel doses for two million people, but is reportedly intent on getting the vaccine administered as quickly as possible – quickly as in by Election Day, now likely to be March 16.

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Wouldn’t it be nice if cafes were reopening and weddings were big again just as the voters were heading to the polls? Of course it would be, and not just for Bibi. But is it realistic? We now know that economists were too pessimistic early on in the pandemic crisis about the Israeli economy’s ability to roll with the coronavirus punches. Now they seem to be too optimistic about the vaccine’s ability to lead a recovery.

Take the Finance Ministry’s latest forecast, which offers two very different scenarios for economic growth, each hinging mainly on the availability of a vaccine. With widespread immunization, Israeli gross domestic product will grow 4.5% in 2021 and unemployment will be a mere 8.9%; without one, GDP will grow just 2.4% next year and the jobless rate will average 12.3%. Without a vaccine, the economy will only recover the ground it lost during the coronavirus in 2022, in other words, two lost years.

Economists have flattened the downward bit of the economic curve for this year and they will probably have to flatten the rising bit of it for 2021 and beyond.

The first problem is logistical. There aren’t enough vaccines for all the world to get them in short order. Like other rich countries, Israel has secured enough of the product for its people, but the “vaccine nationalism” that has caused governments to compete for limited supplies will end up slowing a global economic recovery.

Sure, if you get your population adequately inoculated, businesses can reopen and jobs come back, but if other countries in the global supply chain are still reeling, the rebound will be limited. A RAND Corp. study estimated that unequal vaccine distribution will cost the world economy $1.2 trillion a year.

The second problem is psychological. As much as everyone talks about salvation by vaccine, a surprisingly large number of people don’t want to be saved. A poll by the Israel Democracy Institute in November found that 52% of Israelis wouldn’t let themselves be vaccinated in the first round of inoculations and a second, conducted in August by the Galilee Medical Center, found that among health workers, the refusal rate was even higher (60.2%) than for the general public (49.6%).

Needless to say, if large swathes of Israel’s population don’t get vaccinated, its efficacy will be limited. The kinds of businesses that have been hit the hardest by the lockdown, the ones that face the public, such as restaurants and entertainment, won’t be able to resume operations.

I don’t know whether Israel really has so many anti-vaxxers, but over the course of the coronavirus crisis Israelis have become more and more skeptical of their government and the prime minister in particular. Lockdown rebellions by store owners and shopping malls in recent weeks are only one manifestation of that.

Netanyahu’s enthusiasm for getting the vaccine into people’s arms quickly threatens to make them even more skeptical. Forgetting any doubts about his motives, a rapid rollout is far more liable to go wrong, perhaps badly wrong, deterring even more people from being immunized.

It would be quite understandable that even among those ready and willing to be vaccinated, many will wait for a first round of guinea pigs before they risk a jab. But the longer they wait, the longer it will take for the vaccination to have its effect on the reopening of the economy.

Worryingly, employers are skeptical that the vaccine will make much of a difference to their businesses’ outlook. A survey by the personnel agency Manpower found that 30% believed hiring would never return to the pre-pandemic levels and only 10% said it would do so within the next three months.

It’s easy to understand their pessimism. Israel’s economy has held up relatively well during the pandemic, but it was only because the high-tech sector proved to be COVID-immune and the government threw money around with abandon. The actual management of the coronavirus has left a lot to be desired.

Ten months into the crisis, many businesspeople have adopted a defeatist attitude about the coronavirus and the government’s ability to contend with it. Unless you’re a tech entrepreneur looking at all the juicy remote-economy business lying ahead, business sentiment surrounding the coronavirus is low and that is going to weigh on a recovery even if Israel’s vaccination program goes smoothly. Let’s hope the light shines more brightly in 2022.

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