COVID-19 vaccine will bring a new shift in the local economy
As new vaccines appear, economists suggest that going ‘back to normal’ will be relative in coronavirus aftermath
By Pedro Correa Henry
Special to The STAR
As vaccines against COVID-19 are expected to receive emergency use authorization during the coming year, will it be enough to produce economic relief in Puerto Rico?
Economists claimed Thursday that even if more vaccines against the coronavirus become available through the U.S. Food and Drug Administration, a rise in economic development would not be straightforward or swift, as some expect.
Advantage Business Consulting President Vicente Feliciano said that even though he acknowledges that the vaccine is an important step toward positive change, he emphasized that U.S. jurisdictions would be facing challenges as vaccination goes forward.
“As people get vaccinated, what you would have is a shift back to ‘normality,’ which means that the sectors that so far have suffered would benefit disproportionally, and the sectors that have benefitted or not been affected by the pandemic, their impact would be marginal or even negative,” Feliciano said. “It will all depend on how you have fared during the pandemic, particularly in the early stages.”
The economist told the STAR that such “normality” would also redefine people’s spending habits as sectors will behave differently after the pandemic.
“Household income went up [during the pandemic]” in some cases, Feliciano said.
“If you were a retiree, and you got the $1,200 from the federal government, and your pension and Social Security were not impacted, and you didn’t get sick, you came out ahead during the pandemic,” he said. “If you had a low-paying job, and you got unemployment benefits and the $600 from the supplementary income per week, you came out ahead, and the sectors that were able to capture that additional household income were doing very well.”
Feliciano noted that hardware and technology companies benefitted from this scenario.
However, when the STAR asked if the vaccine would bring economic relief or uncertainty, he replied that it would bring relief to the economic sector “depending on what sector you are in.”
“If you’re in the restaurant or hospitality sector, it’s a godsend; it might be the difference between surviving and bankruptcy, while other areas that have benefitted, they might not do that well or they do okay,” he said.
“The pandemic accelerated many changes that were underway in the economy, so those changes would probably slow down in its [down]trend, but they will continue,” Feliciano said. “Take for example internet retail sales, people got used to them; home food delivery, people got used to them; it might go down after the pandemic, but it will not go down to pre-pandemic levels.
“As for business traveling, companies realized that they don’t need to travel that much if a meeting can be held through Zoom. You would expect business travel to resume, but probably not at the pre-pandemic level.”
Economist José Caraballo Cueto, meanwhile, stated that the vaccine is a glimmer of hope for reducing the economic impact caused by the coronavirus. Nonetheless, he said recovery would be time-consuming and might last for the rest of the fiscal year.
“There’s so much harm that has been done, we need economic policies designed specifically to prevent more economic tolls and reverse any damage, such as financial liquidity to small and midsize enterprises, and developing start-up programs to help temporarily or permanently closed businesses, like in the entertainment and hospitality industry, to flourish,” Caraballo Cueto said. “In order to come back, it will require financing and technical advising provided by the government.”
The business administration professor at the University of Puerto Rico-Cayey suggested that if the local government depends only on the COVID-19 vaccines to spur economic growth, the island will see only a “midterm change.”
“Many of the decisions involving the vaccine depend on the federal government; it is necessary that successful pharmaceutical manufacturers share the vaccine’s composition with others because neither Pfizer nor Moderna will meet the worldwide demand [by themselves],” Caraballo Cueto said. “If not, we will be in this for the long run; what happens with other economies will also affect us.”