Last week, Bank of America made a rough, back-of-the-envelope calculation that roughly 12% of the US population had achieved COVID herd immunity, far below the 60% threshold that is necessary for the disease to be contained without fresh policy actions, prompting BofA to propose a vision for a world in which we get periodic covid flareups in the coming months, many of which could culminate in fresh lockdowns.
Taking the initial thoughts from BofA, this morning Deutsche Bank published an extensive report analyzing what "Living with Covid" for the foreseeable future would be like (with an emphasis on Asian countries) since - like BofA - the German bank does not see herd immunity emerging as a factor until 2022 for advanced economies, and 2023 for the rest of the world, to wit:
Although developments on the vaccine front have been promising, there is uncertainty over the uptake of vaccines by the public and thereby the pace of achieving herd immunity, which would better ensure a more full normalization of economic activity. Our baseline forecast now assumes that some economies will achieve herd immunity to Covid-19 in 2022, along with most advanced economies. Other countries are likely to have to wait until 2023 to achieve the same. Risks around these forecasts are evenly balanced.
Another key point that remains lost on many politicians both in the US and elsewhere is that "the tolerance for extended rigorous social distancing appears to be weakening, with new social distancing regulations being in most places milder and imposed for shorter durations. People appear to have learned how to protect themselves and to live with the virus better than during the initial outbreaks, as economic data are proving in some respects more resilient to the virus."
The bottom line, as we said many months ago, is that having done the calculus most economies are now willing to reopen their economies as the political and socioeconomic hit from lockdowns is far more adverse to the broader population - and especially the youth which is losing jobs by the millions - than enforcing full quarantine with spotty results while hoping to minimize new cases, something which can be seen most vividly in new cases in some countries like Spain and France, has failed to lead to a rebound in new deaths or hospitalizations.
Finally, reliance on a vaccine as some magic bullet that will magically cure the global economy appears largely misplaced, because as Deutsche notes, "although developments on the vaccine front have been promising, there are concerns about a possible low acceptance by the public of these new vaccines by the public. It may also matter importantly which vaccines are put into commercial production first – they vary significantly in cost and emerging economies could be at a disadvantage in acquiring enough vaccine."
The bottom line, according to the report's authors is that until herd immunity has been achieved - some time in 2022/2023, "economies will remain hostage to the virus - shrinking with each new outbreak and expanding quickly as social distancing eases with the subsequent decline in infection risks."
One can only hope that after the US elections, the political angle of such decision-making will become moot, and policymakers can finally focus on the most optimal outcome without a preference for decisions that leads to who ends up in the White House, but rather what is truly for the benefit of the people.