Corona vaccine will be game changer, but pay attention

Fly. Go on holiday. Dining out. Organize a party at home. All those things that were so self-evident at the beginning of this year have not been so for over six months. For the first time in a long time, there is reason to expect all of those things to become possible again in the near future. 

With the news that a vaccine has been found against corona, there is reason enough for the first time in a long time to be confident that that damned cycle of 'number of corona infections is decreasing, economy is opening, number of corona infections is increasing, economy is closing. ' is interrupted. The vaccine opens the door to a sustainable economic recovery and we can start thinking about what the post-corona economy looks like. Lockdown can be removed from the daily vocabulary again. 

Not plain sailing
We can therefore safely call this news a game changer, it is the breakthrough that we have all been yearning for for more than half a year. But watch out! That does not mean that everything will go smoothly from now on. However close we are to a vaccine, that process is still in the experimental stage. Closer to the end of that phase, but still in it. That means that a setback here or there remains possible. 

And it will also take some time after that before the vaccine can not only be distributed, but also widely administered to the population. Some sick cases after they get the vaccine and the optimism can take a hit. 

Better safe than sorry
But even with all those possible risks and ifs and buts, if we add everything up, we have sufficient reason for the first time in a long time to be more optimistic about a sustainable economic recovery. This is certainly because the arrival of a vaccine means that monetary policy will remain very loose and will be further relaxed. The central banks are going to err on the side of caution. They would rather run the risk of accelerating too early and too much than braking too early. 

Edin Mujagic

Edin Mujagić is an economist and manager at Beleggingsfonds Hoofbosch. He focuses on global central banks, and in his blogs he writes mainly about developments in interest rates and inflation. He has also written several books.

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