Informed by the expertise of epidemiologists, a consensus view of the most likely global economic outlook is emerging. And the virus and its likely behavior are dominating that outlook. The public health experts agree that it will take 18–24 months before the world will have an effective vaccine, be in a position to mass-produce it, and, equally important, be able to actually inoculate the billions of people required to get to epidemiologically relevant 80 percent immunity levels. In the meantime, second or third rounds of the virus flaring up are highly likely, as has already happened in Singapore and Japan despite early containment success.
Against this pandemic backdrop, the probability of a quick, V-shaped or even U-shaped economic recovery is extremely low. Of course, we can’t be in total lockdown for 18–24 months. Governments, the private sector, and civil society will have to find the fine balance of reopening the economy to some degree to ensure the adequate provision of medical supplies, food, and other necessities without letting subsequent pandemic outbreaks get out of control. We are likely going to see economic activity pick up in fits and starts with a longer, sluggish recovery lasting into 2022.
As we hopefully get the current acute COVID-19 virus spikes in places like Italy, Spain, or New York City under control soon, for the economic outlook, this is only the end of the beginning. We are embarking on a long, uncertain journey. And the “new normal” starts now. Critically, 18–24 months is long enough a timeframe to irreversibly change consumer behaviors, business practices, and market structures.