The covid vaccine-rollout news is creating fresh ripples of hope everywhere. We are seeing the fastest recovery after the steepest slump.
Lenin once said, “There are decades where nothing happens, and there are weeks where decades happen.” 2020 has given us many such weeks. COVID came to us as a black swan giving us the sharpest meltdown. Then the vaccine-rollout induced the strongest bounce back in global equities.
The coronavirus not only bought to fore human strength and resilience but also tested the resilience of the financial markets. Stock markets saw a ‘pandemic led’ rock bottom at the start of the year, and a classic ‘podium finish’ at the year-end.
Growth drivers in the pandemic
When Chinese factories shutdown, shock waves were sent to supply chains globally. Businesses and governments rushed in to fill in the gap and reduce reliance on the world’s manufacturing powerhouse. Other emerging markets were the biggest beneficiary of this.
Interest rates are all-time low. An easy monetary policy push is being given worldwide. These easy financial conditions have led to frenzied speculative investments. Both these led the capital market to come back roaring, much faster than the job market. History shows that pandemics depress interest rates for a long time, so these rates will be a new normal. SO will be the low-interest rate led growth.
The accumulated savings of the Indian salaried class due to limited expenses on travel and recreation has given rise to discretionary spending now. This coupled with pen-up demand has triggered one of the fastest recoveries ever witnessed. The next leg of growth is expected from services that were on the forefoot till now. Tourism has a lot of pent-up demand and is expected to do well in the year ahead, especially after the vaccine.
Strength indicators of the economy after vaccine-rollout
The market high is not just a positive sentiment with the vaccine-rollout news. It is a structural improvement. We have several strong indicators to prove this point.
The record high GST collection of 1.15 trillion has reassured that the economic activity has resumed to normalcy, back with a bang. A large part of it is attributed to an increase in revenue from the import of goods.
The auto sales recovery has taken everyone by storm. The robust recovery in rural demand accelerated this year-on-year sale pace.
With the record number of strong primary issuances of blockbuster IPOs, be it Mazagaon Dock Shipbuilders Ltd or Burger King India or Mrs. Bectors Food Specialties, there was optimism in all sectors. The businesses are not just growing on sentiment but also rolling out new greenfield developments.
Sector-wise, IT became the torchbearer of COVID induced growth. We now have a digitally empowered pathway to economic revival. The integration of deep technology across all sectors has revolutionized business models. Healthcare teleconsultations alone saw a 500% jump post COVID!
Coronavirus vaccine or just an immunity passport to resume commerce?
India, despite being the second-worst hit nation, is acing in the mass vaccination drive. It has tied up with indigenous as well as foreign manufactures to ensure a timely and steady supply. With the mass production in place, India will join the global vaccine supply group and help the world fight COVID. What we cannot afford now is any credibility gap in these vaccines which came as our savior.
“COVID Vaccine is ready within a year. Cannabis has been older than mankind and yet ‘we need more research'”, says a youth lacking faith in vaccine credibility.
“Why don’t the big pharma companies and governments taking accountability for any possible side-effects and are rather rushing through the trials?”, says another.
“I will not take the vaccine, I will not be your cash cow”, says another angry youth against the speeded up emergency roll-outs.
There are people who see vaccines as mere immunity passports to kick start life and commerce. The lack of transparency regarding the approval process is further risking the credibility of these vaccines. It is also threatening the reputation of vaccine-makers who are to deliver millions of doses domestically and billions of doses elsewhere in the days ahead. Even an iota of doubt can send the vaccine production and then the global economy back to jitters.