According to former RBI Governor Raghuram Rajan, the impact of coronavirus will be felt for a long time and the impact will be extensive even with a coronavirus vaccine. Rajan anticipates people will start feeling safe and venturing out, including going to eateries, only by the middle of next year.
"You have to vaccinate a lot of people. So, the earliest people are going to feel safe going into crowded restaurants is probably going to be by the middle of next year," said Rajan in an interview to CNBC. He said that an economy cannot be fully recovered until there is greater confidence for people to mingle and high-contact services such as restaurants, travel and tourism open up. Rajan added that governments must now aim to provide long-term support to affected sectors.
The economist said that even if a COVID-19 vaccine is found as early as quarter four, economic damages would still occur.
He underscored that a large number of small businesses would find it difficult to make comeback. "As this goes on, more and more businesses find that a long period without revenue, but high cost, implies that they simply don't have a chance, and they're closing down," he said.
Reiterating experts who warned that the pandemic could lead to more protectionism around the world, Rajan said that a world with protectionism is one that would take more time to recover. Countries that are dependent on exports would be highly impacted, he said, adding that poor developing countries and emerging markets would also be hit.
Meanwhile, Oxford University-AstraZeneca have announced positive results from the first two phases of vaccine trials. Serum Institute of India, the manufacturer, has said that if approvals are received in time, the COVID-19 vaccine could be available by year end. Pfizer and collaborator BioNTech have also announced positive results from their early trials.