17 May 2021
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Could the PM's vaccination ‘stuff up’ screw our economy?

Peter Switzer
12 April 2021

Some of my financial planning clients were surprised about my positivity about stocks in the middle of last year but I’d tell them that our Covid-19 fighting was about the best in the world so our economy will be about the best in the world. And that has to be great for stocks.

Our stock market has rebounded 43% since the depths of the Coronavirus crash but if our vaccination programme is screwed up, stock prices could easily go negative.

I’m not turning negative now but I’m watching carefully the implications of AstraZeneca being dodgy for under 50s and our delayed deliveries of the Pfizer products.

The Prime Minister has admitted that not everyone will be vaccinated by the end of the year, but just how important is this?

Let’s take a more international view first. For 2021, it’s not a big economic deal, but it sure is for 2022.

Because we can’t travel overseas now and probably won’t be able to until next year (apart from say NZ, Fiji and Singapore), what we usually spend overseas on holidaying ($69 billion) is here helping local tourism businesses, and Gerry Harvey along with other retailers.

It also explains why holiday traffic jams are like something we’ve never seen before, as local tourism destinations benefit from travellers now staying in Australia for their breaks rather than heading overseas.

Also because the world is still struggling with the pandemic with Europe, Canada and South America needing more lockdowns, it’s hard to see the lamed international tourism sector picking up its bed and walking to normalcy this year.

So our economy is good and solid for 2021 and not really threatened by an infection outbreak, or a disappointing vaccination programme. But if we drag the chain on jabs into 2022, then we could see both economic and stock market problems.

We could miss out on international traveller business that would’ve been happy to come here given our record on fighting the virus but the new world is going to be Covid-19 phobic for some time. This means we have to get the vaccination thumbs up ASAP.

That’s my big picture view with its international implications. But what about the local economic story going forward?

I don’t doubt that most Australians will have access to a vaccination by year’s end and that will help herd immunity.

Some experts think we need three-quarters of the country vaccinated to reach herd immunity, but that’s guesswork at this stage. The US-based Cleveland Clinic has had a crack at working out when we could be safe from this damn virus: “The estimate for COVID-19 is that roughly 50% to 80% of the population will need to be vaccinated to reach the herd immunity threshold. (In contrast, the flu needs between 33% and 44% vaccinated to reach the herd immunity threshold.)”

However, the measles needs 95% of the population vaccinated, while for polio the threshold is 80%. So what the number is with the Coronavirus will be a ‘suck it and see’ experience for the next 12 months.

But with winter approaching and infections more likely as we become more relaxed about social distancing, a threat to the economy could be how state Premiers respond to any local outbreaks.

The latest pow-wow between the PM and the Premiers saw the latter group give a loose undertaking to respond to outbreaks on a regional basis rather than on a state-wide one.

That should be a plus for the local economy, and the fact that both WA’s and Queensland’s premiers have won their elections, they might be more willing to put away their border-closing sledgehammers to crack open their threatening Coronavirus ‘nuts’!

Australia has been one of the best at beating the Coronavirus and it does mean that we don’t have to have a vaccination programme on par with the dopes overseas in the US and Europe, who have mismanaged their battle against Covid-19. However, we can’t rest on our laurels.

And the PM, Scott Morrison, needs this vaccination problem like a hole in the head, with his handling of the sexual misdeeds in Canberra all starting to undermine his once huge lead in the political popularity polls.

Interestingly, the more leftish media is now very comfortable praising the premiers for beating the virus but are totally blaming the PM for the vaccination rollout mistakes.

Call me objective and two-eyed but doesn’t that sound one-eyed and biased?

Given the nature of politics and politicians, I won’t be surprised if we see a positive vaccination surprise way before year’s end, despite ScoMo telling us that we all won’t be jabbed by the end of 2021.

Pollies love to under-promise and over-deliver to turn around their problems in the polls, especially when the next election is not near.

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