The pandemic, week to Dec 15th

Health

The United States gave the greenlight for the use of a COVID-19 vaccine. On December 11^th, the American Food and Drug Administration (FDA) announced that it would be issuing emergency-use authorisation to a vaccine developed by the pharmaceutical giant Pfizer and its partner BioNTech. The decision allows the Pfizer-BioNTech vaccine to be distributed and administered in the United States immediately. In a completed Phase III trial, the vaccine had an efficacy of over 94% and resulted in no serious safety concerns. The peer-reviewed results of the trial have just been published in the New England Journal of Medicine. The first jabs were given on December 14^th.

The Pfizer-BioNTech vaccine had already received regulatory approval in the United Kingdom, Canada, Mexico, Bahrain and Saudi Arabia. On December 14^th, Singapore became the first Asian country to authorise this vaccine. In the United Kingdom, tens of thousands of people received the jab last week––with the elderly and vulnerable given priority. In the coming week, general practitioner practices will begin receiving batches of 975 doses to be used up within three-and-a-half days. In Canada, the country’s first batch of vaccines touched down at Mirabel International Airport in Montreal with distribution expected to begin immediately.

Newly diagnosed cases of COVID-19 continued to reach new heights globally. On December 11^th, a new single day record of 748,974 new cases was recorded worldwide. However, the seven-day rolling-average of daily reported cases––which peaked on December 7^th––has declined steadily all week.

The same is true of daily deaths, which have stabilised in the past fortnight. The seven-day rolling-average of daily reported deaths also peaked on December 7^th and has declined steadily all week since. On December 12^th, the total number of reported deaths due to COVID-19 crossed 1.6 million globally.

In Europe, the situation remains serious. There have been dramatic increases in per capita case numbers in the Netherlands, Denmark and Sweden; the Netherlands, which had imposed only mild restrictions in March, imposed its first tough lockdown, lasting for the five weeks to mid January. In the Baltic states, case rates are high and still increasing, especially in Lithuania. In the Balkans, case rates remain some of the highest in the world––especially in Slovenia, Croatia and Serbia––but are either stable or have begun to decline.

In the United States, case numbers continue to climb. This is being driven by high rates of infection in much of the American Midwest, a rapid escalation in infection rates case rates across much of the Sunbelt and steep increases in caseloads in California, Texas and New York State. The same is true of daily deaths, which hit a new single day record of 3,157 on December 9^th, and the accumulated total passed 300,000 on December 14^th.

On a per capita basis, Latin America’s caseload remains moderately high––especially in Brazil where cases are high and increasing steadily––but the situation is otherwise stable. In the Middle East, Africa Asia and Oceania, caseloads remain low and stable, with some notable exceptions. In particular, both South Africa and Namibia present cause for concern, having seen dramatic spikes in per capita case rates in the last week.

Economics

Industrial output in China grew in November at its fastest rate in 20 months, driven by recoveries in consumer spending and in overseas demand for Chinese manufactures. With overall economic growth accelerating in 2020’s fourth quarter, economists are raising their forecasts for 2021 growth to 6-7% or even higher.

In the United States, the Department of Labour published its weekly unemployment insurance claims data. In the week ending on December 5^th, there were 853,000 new seasonally adjusted claims––137,000 more than the previous week. That means that jobless claims have increased in three out of the last four weeks. The data paint a picture of a slowing economic recovery.

In Europe, the President of the European Central Bank Christine Lagarde addressed the press after a meeting of the bank’s Governing Council, stating that the recent resurgence of COVID-19 and restriction measures imposed to contain it are putting substantial downward pressure on economic activity in the euro area. As a consequence, the European economy is expected to contract in the fourth quarter. In response, the Governing Council have chosen to maintain key ECB interest rates unchanged and to expand the Pandemic Emergency Purchase Programme (PEPP)––a large-scale asset purchasing programme––by €500 billion, to a total of €1.850 trillion.

It was another strong week for financial markets. In the United States, the Dow Jones Industrial Average, S&P 500 and NASDAQ Composite Index all opened on the climb, on Dec 14^th, in response to the FDA’s extension of emergency use authorisation to the Pfizer-BioNTech vaccine over the weekend. In particular, the Dow Jones hit a new record high while the S&P 500 and NASDAQ hovered just below theirs.

Politics

On December 14^th, Joe Biden was officially recognised as the next president of the United States as members of the Electoral College voted to confirm the results of the November 3^rd election.  Senior Republican senators at last began describing Biden as president-elect, also opening the way for bipartisan co-operation over COVID-19 relief and the vaccines roll-out.

The final European Council of the year signed off on a landmark €1.8 trillion budget-and-recovery package. The EU budget has for months been the subject of vetoes by Poland and Hungary over the so-called “Rule of Law Mechanism,” a measure which requires that member states must uphold democratic standards to access the EU’s emergency coronavirus relief package. The two governments have both been accused of violating the democratic standards enshrined in the EU’s founding treaty. Ultimately, the Polish and Hungarian vetoes were withdrawn on the basis of a face-saving non-binding declaration assuring them they would not be unfairly singled out.

In the United States––by contrast––congressional leaders again failed to reach agreement on a budget and a second COVID-19 stimulus package. The Senate approved a one-week stopgap bill to prevent the government from shutting down and to keep Federal funds flowing. A bipartisan group of House and Senate lawmakers has so far struggled to finalise a proposed $908 billion relief package. The sticking points are disagreements over additional funding for cash-strapped state and local governments––a Democratic demand––and a set of sweeping COVID-19 liability protections for businesses––a Republican one.

On the 83^rd anniversary of the Nanjing Massacre, in which on December 13^th 1937 Japanese troops slaughtered a claimed 300,000 Chinese citizens, Russia and China collaborated over the memorial ceremony in what was seen as a symbolic pointer of efforts to rebalance the international order, given the poor state of US-China relations. On a day which is always a sensitive one for Sino-Japanese relations, President Xi Jinping and fellow Politburo Standing Committee members nevertheless stayed away from the event, giving it a lower profile.