Yesterday I participated in a discussion with a group of advisors and investors on the topic of CoVid and the current economic environment.
I benefitted from the information and opinions shared by a number of wise people, and thought I should share some of my take-aways in case it might be of benefit to others. I welcome your observations and additional reference points.
Ric Deverell (Macquarie chief economist) was kind enough to provide some chart backing to part of the discussion – I have poached some of his content (with permission). The data provides hope and perspective.
Australia’s COVID vaccination hope is well founded
- Evidence that mass vaccination works well in terms of significantly reducing the severe impacts of CoVid on a nation (vastly reduces hospitalisations, deaths etc.)
- The best case study of this is Canada which has high vaccination rates and did it with similar tools and at similar speed as Australia is doing right now – it has a lower daily CoVid deaths per capita rate than NSW has right now
- It is true that vaccine efficacy fades, but evidence exists (Israel) that boosters are a mitigant
It seems reasonable to assume that Australia will achieve the high vaccination rates our politicians are setting as the bar for reopening
- Australia’s vaccine hesitancy has reduced very significantly, with evidence that more than 80% of people have been or are planning to get vaccinated, and another ~10% open to it (“uncertain”)
- Most similar developed countries have now made it to our target levels, or are close to it
Australia’s vaccination program is now at lightspeed – and there is reason to be hopeful we will hit the targets fairly quickly
- Our vaccination rates are now up there with the most rapid programs we have seen globally to date
- NSW current rate is equivalent to ~7% of the population per week receiving a jab
- If NSW continues its trend it will be at 80% single-dosed in September and 80% double dosed in October
The net economic impact of CoVid plus government stimulus has been surprisingly mild globally, and for Australia
- World GDP already above pre-CoVid levels, and recovery appears to have more to run
- Many key economic measures registered less severe, or less protracted, shocks than that of previous recessions, with the GFC a great comparison point
In Australia, it seems reasonable to assume that once current lockdowns end the economy will bounce-back quickly (again)
- The fears that “this time it is different” are probably unfounded
- Overseas and in Australia we tend to see a consistent bounce-back after each lockdown
- Victoria is a great experiment on the impact each time there is a lockdown and so far the bounce-backs have been fairly consistent
- A number of metrics appear to suggest that Australian consumers are “seeing through” the current lockdowns, with house prices being a fairly good sentiment proxy (price growth continues)