DOSSIER COVID-19, MACRO AND MARKETS
Covid-19 – a vulnerable recovery
5 November 2021
New treatments to limit the spread of Covid-19 are encouraging but exiting the Covid ravine remains a slow journey liable to setbacks. Clarissa Dann summarises Deutsche Bank Research indicators of how far the world has come in reaching some form of business as usual
As annual conference season draws to a close, most organisers of the financial services industry’s main events maintain that after two years of virtual meetings it will once more be business as usual in 2022. Yet given the persistence of the Covid-19 pandemic in so many regions of the world, it might be premature to assume that face-to-face gatherings will return in their entirety next autumn.
On 2 November, while world leaders were gathered at the COP26 climate change conference in Glasgow, Johns Hopkins University of Medicine data had logged the global death toll from Covid-19 as having passed the five million mark.1
In Deutsche Bank Research’s Exit Strategy Policy Tracker (12 October) Marion Laboure, Jim Reid, and researcher Krishna Bhimavarapu of Accuity Knowledge Partners reflect on the dashboard data along with DBResearch Data Innovation Group (dbDIG) data, regional responses, and where vaccine developments are leading.
“The global vaccine rollout continues to accelerate with over 6.5 billion doses administered worldwide, of which 402 million are in the US. Despite this, the threat of the Delta variant and new waves in different countries continue to put the economic recovery in jeopardy,” they warn. The team also highlight that around 4% of the total vaccine doses administered are booster doses, and how “long-Covid” is, for some sufferers, holding back full recovery from the virus.
Overall (except China), most countries have abandoned targets of bringing Covid infections down to zero. While China’s Golden Week public holiday (1–7 October) saw most opting to stay home rather than going out or travelling, in other major economies the mobility behaviour of consumers is trending back to normal after falling sharply in May 2020. Although air travel is taking longer to recover, “most people have gone to their workplace, sent children to school, travelled 25km or more and used public transport ever since May 2020,” the team reported.
Figure 1: New cases are now trending lower globally after plateauing a few weeks back
Source: Deutsche Bank, JHU coronavirus database. Data as on October 10 2021
While globally, the daily number of new coronavirus cases has begun to edge lower (see Figure 1), progress varies from region to region (see Figure 2 and 3) with the following broadly summarising the October 2021 picture.
- Although the US 7-day average of Covid-19 cases fell below 100,000 first time since August 2021, by 1 November, according to the John Hopkins University of Medicine Coronavirus Resource Centre, US total deaths had risen to 745,836.2
- The UK’s seven-day average of new cases is at 35,000 a day, much higher than its European peers and five times higher than France or Germany.
- India’s new daily cases fell to 18,000+ with the highest recovery rate in more than seven months. Most Asian nations are seeing falling cases except Singapore, whose cases are the highest since Oct 2020.
- Russia continues to report around 1,000 deaths a day, and on 20 October Latvia became the first European country to reimpose a lockdown of one month, in response to rising infections.3
Figure 2: Deaths per million in selected countries
Source: Deutsche Bank, Bloomberg Finance LP. Note: Data as on 10 October 2021
Figure 3: Cases per million in select countries
Source: Deutsche Bank, Bloomberg Finance LP. Note: Data as on 10 October 2021
“The Ministry of Health is doing whatever we can to support and bolster the hospitals”
Re-opening of economies
“As vaccinations rise and infections fall most countries are moving towards reopening towards the end of the year,” the Deutsche Bank Research team added, with Singapore, Australia and New Zealand among the countries now opening up – although on 20 October Singapore announced a lockdown extension to 21 November because of pressure on the health service. “The hospitals are no doubt bracing themselves for a sustained heavy patient load. The Ministry of Health is doing whatever we can to support and bolster the hospitals,”4 said Health Minister Ong Ye Kung at a press conference the same day (20 October).
By contrast, China has announced that next February’s Beijing Winter Olympics will be closed to spectators from abroad and a 21-day quarantine will be required for unvaccinated athletes.5
The change of policy elsewhere reflects the continuing global rollout of the vaccination campaign with over 6.5 billion doses administered of which 402 million are in the US. “Despite this, the threat of the Delta variant and new waves in different countries continue to put the economic recovery in jeopardy,” reflected the report.
Currently, the vaccines to have received approval from the World Health Organisation (WHO) are those produced by Pfizer-BioNTech, AstraZeneca, Johnson & Johnson, Moderna and China’s Sinovac and Sinopharm. The WHO is also considering an emergency approval of India’s Covaxin with an announcement scheduled for 3 November, while it is still reviewing data about Russia’s Sputnik V vaccine for emergency use.
Most countries have now granted approval to at least one vaccine and commenced inoculations, the team reports, although while the total doses administered globally is equivalent to vaccinating 46% of the world only 2.3% people in low-income countries have yet received one dose or more.
Up to 15 billion doses are needed globally; a target that is likely be reached in 2022, although risks include booster shots being required as the effectiveness of jabs administered earlier in 2020 wears off and the possibility of a new variant emerging that escapes vaccine-induced immunity. Figure 4 summaries the current status of vaccine production and distribution plans.
Figure 4: Vaccine production and distribution status
Other positive news includes promising early results for the anti-Covid pill Molnupiravir, developed by Merck and partner Ridgeback Biotherapeutics, which Merck reports could cut the risk of hospitalisation due to Covid-19 by 50%.6 The partners have already applied to the US Food and Drug Administration (FDA) for the drug to get emergency use authorisation.
Molnupiravir is administered every 12 hours over five days, with the cost of an individual course around US$700. Merck expects to produce 10 million treatment courses by the year-end and has a deal with the US to provide 1.7 million courses for US$1.2bn – albeit only enough for a small percentage of America’s total population of 330 million. The UK government has ordered 480,000 courses of Molnupiravir, which subject to approval will be delivered before the end of November and also 250,000 courses of Pfizer’s anti-viral treatment.7 Also encouraging are test results from Israeli firm RedHill Biopharma, which reported that its drug Opaganib achieved a 62% mortality reduction among a group of moderately severe Covid-19 patients who received the treatment (4 October).8
The board of WHO has recommended a third dose for the immune-compromised (although members are against it being made more widely available).9 In August, the US government announced plans to administer a booster dose for recipients of the Pfizer vaccine and a Food and Drug Administration (FDA) panel recently voted to recommend boosters of the Moderna and Johnson & Johnson vaccines for the same groups. The EU’s own watchdog, the European Medical Agency has similarly recommended a top-up jab for adults aged 65-plus, those with existing high-risk medical conditions or who are regularly exposed to the virus.
The case for boosters is supported by a study in The New England Journal of Medicine that found a reduction in confirmed infection and severe illness in a large Israeli population aged 60 years or more after an administration of a Pfizer-BioNTech booster dose and Johnson & Johnson’s own case study suggesting antibody levels are nine times higher one week after the booster and up to 12 times more four weeks later.10
Long-Covid and Mu
Casting a shadow over these positive developments is the newly emerging phenomenon dubbed ‘long-Covid’, reflecting the fact that many people who fall ill but survive then find a full recovery to be surprisingly elusive. Recent research suggests that long-Covid afflicts 10–20% of those who have contracted coronavirus and has created a need for specialised clinics to treat patients suffering with scarred lungs, chronic heart damage and other symptoms. In the UK alone around 1.1 million people have reported experiencing long Covid.
WHO defines individuals with what it calls “post Covid-19 condition” as those who have symptoms persisting three months after an initial bout of Covid that lasts for at least two months and can’t be explained by an alternative diagnosis. However, it is still not clear if Covid is entirely to blame. A study in medical journal The Lancet published 8 October found that social restrictions due to Covid could also substantially take a toll on mental health, with about 53.2 million cases of major depressive disorder and 76.2 million of anxiety resulting.11
WHO is also monitoring a relatively new variant of Covid-19 called Mu that was first identified in Colombia in January 2021 and was feared to be more resistant to vaccines. The Mu variant has spread to 52 countries and all 50 US states but appears to have plateaued in the US – where the Delta variant still dominates – and accounts for only 0.1% of current infections as the Mu variant’s immune evasion is inferior to the Delta variant’s transmissibility.
“We’re going to reduce the spread of COVID-19 by increasing the share of the workforce that is vaccinated in businesses all across America”
The Deutsche Bank Research Exit Strategy Policy Tracker references to a CNN poll that finds more than 50% of Americans now support businesses requiring proof of vaccination from employees. So-called “vaccine mandates” are fast becoming a controversial issue in the US, where on 9 September President Biden announced plans that – if passed by Federal regulators – would enable businesses with 100 or more employees (representing 80 million workers) to insist that they be vaccinated or show a negative test at least once a week.12
“Some of the biggest companies are already requiring this: United Airlines, Disney, Tysons Food, and even Fox News,” said Biden. He added, “We’re going to protect vaccinated workers from unvaccinated co-workers. We’re going to reduce the spread of COVID-19 by increasing the share of the workforce that is vaccinated in businesses all across America.”
Vaccine mandates are highly controversial. “Many countries do require vaccines for particular groups of workers, such as carers in Australia and Britain and medical staff in Italy. The risk, however, is that some people would rather refuse the vaccine and not work—an especially dangerous prospect if those people are health-care workers during a pandemic,” commented The Economist on 10 August. The newspaper also makes the point that once vaccines move from emergency use listing to full approval status, the momentum for vaccine mandates will intensify.
The report concluded by looking at other normalcy indicators provided by the dbDIG data providing some insights.
- Global vessel capacity trending lower since the start of 2021 as supply chains come under increased strain to manage lead times
- Recovery of air traffic in the US and Europe has slowed
- Global manufacturing purchase managers indices reveal that high prices and poor lead times have diverged since the world started recovering from Covid.
- While consumer spending has improved across categories since the same period a year ago, it remains negative in most categories compared to pre-Covid levels except for cosmetics.
While inflation expectations in the US have remained elevated post May 2021, they are now on an uptrend in all of Europe. The IMF released a statement on 14 October urging central banks to monitor inflation and “look through” inflation pressures that are transitory. “They will act appropriately if risks of inflation expectations de-anchoring become concrete,” said the International Monetary and Financial Committee in a communique.13
In short, while huge progress has been made in terms of containment and living with the virus since the outbreak of Covid-19 was first declared a pandemic in March 2020, there is still quite some distance to go.
Deutsche Bank Research reports referenced:
Exit Strategy Policy Tracker by Marion Laboure, Jim Reid and Krishna Bhimavarapu (12 October)
1 See https://bit.ly/3pYO3hP at coronavirus.jhu.edu
2 See https://bit.ly/3pYO3hP at coronavirus.jhu.edu
3 See https://bit.ly/3EKaECX at theguardian.com
4 See https://bit.ly/2ZNy2ju at straitstimes.com
5 See https://nyti.ms/3BIozqW at nytimes.com
6 See https://bit.ly/3BBrJg9 at merck.com
7 See https://bit.ly/3BEklR9 at pharmaceutical-technology.com
8 See https://bit.ly/3nWtqjo at redhillbio.com
9 See https://bit.ly/31rhpeu at scientificamerican.com
10 See https://bit.ly/2ZJ8qV4 at nejm.org
11 See https://bit.ly/3k45x8J at thelancet.com
12 See https://bit.ly/3CIhckS at whitehouse.gov
13 See https://bit.ly/3wdeC3C at imf.org
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