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The Uncertainty Pandemic

Policymakers’ most important task is to try to reduce the massive lingering uncertainty regarding COVID-19 while continuing to provide emergency relief to the hardest-hit individuals and economic sectors. But the insecurity fueled by the pandemic is likely to weigh on the global economy long after the worst is in the past.

CAMBRIDGE – The next few months will tell us a lot about the shape of the coming global recovery. Despite ebullient stock markets, uncertainty about COVID-19 remains pervasive. Regardless of the pandemic’s course, therefore, the world’s struggle with the virus so far is likely to affect growth, employment, and politics for a very long time.

Let’s start with the possible good news. In an optimistic scenario, regulators will have approved at least two leading first-generation COVID-19 vaccines by the end of this year. Thanks to extraordinary government regulatory and financial support, these vaccines are going into production even before the conclusion of human clinical trials. Assuming they are effective, biotech firms will already have some 200 million doses on hand by the end of 2020, and will be on track to produce billions more. Distributing them will be a huge undertaking in itself, in part because the public will need to be convinced that a fast-tracked vaccine is safe.

With luck, rich-country citizens who want the vaccine will have received it by the end of 2021. In China, virtually everyone will have been vaccinated by then. A couple of years after that, so will the bulk of the world’s population, including those living in emerging and developing economies.

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