The top problem for economic activity and growth remains the coronavirus pandemic.
As winter reaches the Northern Hemisphere, it became obvious that the virus spreads faster in cold temperatures rather than in warmer weather.
As people are forced to spend more time indoors due to the weather, the number of new infections exceeded the number seen in the spring. Yesterday’s reports from France were staggering – over 40k new coronavirus infections in the last 24h. Also, Spain reached 20k in one single day, and Switzerland, Italy and Germany are all being impacted.
The good news is that the number of deaths no not follow the exponential increase. The bad news is that like it or not, the economy will have a hard time moving forward.
According to a recent study by McKinsey, half of the European SMEs (Small and Middle Enterprises) will go under (i.e. bankrupt) by the third quarter next year if the economy does not improve. Under the current conditions, improvement seems impossible, as lockdowns and restrictions are back on the table.
Is A Vaccine the Ultimate Solution?
The coronavirus pandemic already did severe economic damages. People tend to look only at the economic impact in front of their eyes, but one of the biggest impacts is the one on future generations.
It is estimated that a school shutdown of five months generates losses with a present value of about $10 trillion. This is why the authorities desperately try to avoid lockdown as online schooling during the lockdowns proved to be a total fiasco in many parts of the world.
The last Presidential Debate in the United States took place yesterday. The US elections in a little over a week from now affect the entire world, including Europe. One of the topics during yesterday’s discussions was the US COVID-19 response. President Trump promised a vaccine in a few weeks, but if we look at the timeline of major players involved in finding a cure, we see that there is little chance for that to happen if we also consider production.
Everyone agrees a vaccine is badly needed. On average, a more realistic date considering the time needed for production would be somewhere in the second quarter of next year. Just in time to save the troubled European economies?