KUALA LUMPUR, Nov 24 — A vaccine for Covid-19 will help accelerate the recovery in sectors impacted by the pandemic, but for many of the businesses, survival will remain challenging until the virus is no longer viewed as a significant public health threat, Moody’s Investors Service said today.
It said the pandemic has already inflicted enormous damage on the hardest-hit sectors and will continue to undermine their financial condition and prospects, with repeated virus outbreaks and lockdown measures suppressing demand.
“The risk of business failure increases exponentially the longer the pandemic prevents a return to some semblance of normal activity,” said the international rating agency in a statement here.
It is difficult to know how many businesses will survive several more months of below-normal revenue.
Small and mid-sized businesses across advanced and emerging market countries are at risk and more of them will undoubtedly close on account of the prolonged cash flow shock, it said.
“And those that do survive will have the long and arduous task of rebuilding their balance sheets while also, in many cases, facing significant changes in consumer behaviour and demand patterns.”
Therefore, even if economic activity returns to healthy levels once a vaccine is widely available, the detrimental economic impact and transformed operating environment will be felt for years to come, it said.
As for the vaccine, Moody’s said although successful Phase 3 trials of the vaccines are a big step, there are numerous hurdles ahead, including satisfying approval requirements by regulators in individual countries, production of the billions of doses required for mass vaccination, ensuring proper storage, and building distribution networks.
So far, Pfizer Inc, AstraZeneca Plc and Moderna Inc have announced the effectiveness of their respective vaccines for Covid-19.
Moody’s said the distribution will likely occur in phases once regulators approve a vaccine, with health officials prioritising access for healthcare workers and those in other high-risk professions, as well as for people who are most vulnerable to Covid-19, such as older people and individuals in care homes.
Two important variables in the overall success of vaccines in curbing the pandemic will be the public’s willingness to get vaccinated and what percentage of the population will need to be vaccinated for the spread of the virus to be brought under control.
Vaccine availability likely will vary across countries, with cost and access major hurdles in particular for less-developed economies.
It said many advanced and a handful of middle-income emerging market countries have already secured contracts for hundreds of millions of doses of the vaccines.
Residents of these countries will be among the first to get vaccinated, with their economies benefitting from the associated easing of the public health crisis.
The earlier the health crisis in a country subsides, the stronger the country’s economic recovery will be, it added. — Bernama
