Everything hinges on the success of the Covid vaccine in 2021

It’s not enough that the vaccine, or vaccines plural, ‘work’ in the medical sense, it’s crucial they also work in the economic sense. Picture: AFP

What happens in 2021? Everything and I mean everything depends on the vaccine.

Yes, that’s a statement of the bleeding obvious in terms of the vaccine conquering the virus.

But what I mean is the economic effectiveness of the vaccine.

That’s in terms of what it does for the economy — here, there and everywhere; for investments — same again; for jobs and business survival and indeed success.

It’s not enough that the vaccine, or vaccines plural, “work” in the medical sense, it’s crucial they also work in the economic sense.

What do I mean by that? Essentially that we are able go back to the world of December 2019 and go back to it relatively quickly, and most importantly of all, sustainably.

It’s crucial that we can be able to do two things.

The first is removing all — and again, I do mean all, or substantially all — the barriers to travel, both between states obviously, but also even more critically between countries.

So, no quarantines, no threat of Victorian-style “traffic lights” for entry; maybe only vaccination proof for incoming arrivals.

The second is not simply that we don’t resort to lockdowns — either localised or only for a “few days” — but that both businesses and individuals can be confident that there’s no risk of them happening.

Both are obviously very big asks and even on the most optimistic best case scenario they certainly won’t arrive “with the vaccine” in mid February. So it’s going to be a decidedly uncertain, if not necessarily a rocky few months yet, where we remain at risk of going back to a 2020 future.

Obviously, this does start with the vaccine(s) “working” in that basic medical sense.

But it has to be distributed relatively quickly and pervasively across the world.

Although also, brutally but honestly, to the places that matter to us and indeed the world in an economic sense: most particularly China and the US.

Further, the vaccine(s) have to work on a sustainable basis; that we don’t wake up one morning to find ourselves facing a resurgence either of a mutant of this virus or something similar that forces once again the choices we faced all through 2020.

On this basis, I repeat what I wrote just before Christmas: that 2020 should have been a sobering wake-up to the impossibility of forecasting with any degree of specificity, of the utter idiocy of being too precise or too confident.

We had lived through a year that had proved quite literally completely unpredictable right across the board.

Nothing, nothing, anyone had “predicted” in December 2019 had come to pass.

We can though talk about the world of two scenarios: where the vaccine works in that economic sense and where it doesn’t.

If it does we face an economic boom the like of which we haven’t seen this century or indeed only rarely in the 20th — with the greatest globalised stimulus ever put in place, supercharging a global economy freed similarly to what happened after World War II.

What’s happening in Victoria right now is a pointer. Coming out of its own unique second lockdown through the September quarter Victoria is not only growing much faster than the rest of the country, but acting like a supercharger for the national economy.

In the context of zero interest rates this would underwrite rising share and property values — that is, until investors woke up to the reality that rates would start to rise and rise perhaps punishingly.

If the vaccine did “not work” in that economic sense, we would face chaotic and indeed worse replays of 2020, having spent “all the ammo” and priced in the upside.

Oh dear: we will come back to all this.