The jab factor in delivering economic recovery from Covid

Covid-19 has many and far-reaching impacts in virtually all sectors of the economy and beyond. Its main mechanisms of impacts are the various and essentially necessary containment measures to control the spread of the pandemic.

The containment measures across the world have included compulsory and voluntary curfews, lockdowns, travel bans, closure of institutions, postponement and closure of events and many more along those lines. Impacts of all these include slow economic activities in many sectors including aviation, tourism, hotel, agriculture, education, mining, sports and entertainment, logistics and supply chain and many more. As a result of slow economic activities, there have been total and partial losses of direct and indirect jobs and associated incomes, increase in potential and actual non-performing loans, reduced economic growth as well as loss of government revenues including tax and non-tax revenues to mention but some.

Recovery

Covid-19 has brought economic crisis at all levels. These include global, continental, regional country, firm, household to individual levels. It has made economies to bleed, slowdown, move towards and even into red territories and beyond, reduced sales volumes, reduced sales revenues, reduced profits and dividends as well as growth prospects. Recovery in the context of this article is the process through which all these negative business and economic aspects are changed to the better.

It is all about turning around things and pumping new life into struggling businesses and economies. It is about stopping economies from bleeding. It is changing slowdowns to moving up as well as moving away from red to green territories. It is about increasing sales volumes, revenues, profits and dividends as well as having positive growth prospects.

Covid-19 vaccine

Covid-19 vaccine has been waited for long time since the outbreak of the pandemic. Lack of vaccine was among the major issue of concern when it comes to the spread of the pandemic.

After a relatively short period of time, there have been substantial developments in the vaccine space. Several companies have developed vaccines that are being used in several countries.

It is expected that these vaccines will help in saving lives and reducing the severity of the disease among other things.

Vaccine-recovery nexus

There is arguably a direct and positive relationship between the development and use of Covid-19 vaccine on one hand and economic recovery from Covid-19 on the other. So long as vaccines save lives and reduce the spreading of the pandemic, it stands to play a part in delivering economic recovery from Covid-19. This takes place through various channel. They include bringing back confidence to the supply and demand side of the economy.

Supply side effects

The supply side of the economy is that side with producers of goods and services. It is occupied by captains and titans of the industry who organize factor of production in their firms to produce the needed goods and services. Covid-19 vaccines stand to bring back the lost confidence in the supply side of the economy.

This is because with positive prospects and projections of life coming back to normal there are reasons to re-open productions that were stopped and even start new productions of goods and services across virtually all sectors of the economy. This includes production of goods and services in various value chains and their nodes.

Vaccines are likely to have a stimulus effect on the supply side with anticipated good response on the demand side.

Demand side effects

The demand side is a mirror image of the supply side of the economy. It is occupied by consumers of goods and services produced in the supply side of the economy.

The vaccines are expected to have positive impact on the supply side by way of bringing back high and positive consumer sentiments and confidence across sectors of the economy.

For example, they are expected to bring back the once lost confidence of travelling, organizing and participating in various kinds of events including, opening of hitherto closed institutions such as education ones and much more.

All these, stand to stimulates aggregate demand across value chains and nodes in virtually all sectors of the economy. Increased aggregate demand on its side has positive impacts on the supply side.

It will stimulate production, demand for factor inputs, employment and payments for factor inputs such as labour and by extension increased consumption. It is a vicious cycle.