There are a variety of theories about why this is. The most plausible explanation is that vaccines, especially those based on mRNA, were perceived to have side effects and the risks weren’t worth running if the authorities were true to their word about keeping the virus at bay.
In a tragic inversion of what has happened in much of the rest of the world, this means the young and healthy are more likely to be vaccinated than the elderly. Authorities are trying to make up for lost time but they are now chasing a wave of infections rather than getting out in front of it.
Most other countries, including New Zealand, which imposed severe travel restrictions for much of the pandemic, have now accepted that Covid is endemic and we must learn to live with it. In mainland China, the eradication of Covid is still government policy. Reversing course and launching a drive to get more of the population vaccinated would be tantamount to admitting a catastrophic error.
It seems that having unleashed this virus on the world, China’s dogged and increasingly doomed zero-Covid policy will ensure the damage wrought by the pandemic could drag on for months to come.
In an eerie echo of the early days of the pandemic, supply bottlenecks are already beginning to emerge with the number of container ships waiting off some of China’s biggest ports almost doubling compared to February, according to Bloomberg data. And that’s all before factoring in the possibility of sanctions being imposed on China if Beijing were to respond to Moscow’s requests for financial and military aid.
Will this further boost inflation or retard growth? We already know the answer from earlier in the pandemic: both. The string central bankers were balancing on has become a thread. So, how should they proceed?
Well, as the old jokes goes, I wouldn’t start from here.
With inflation nudging 8pc, unemployment below 4pc, rates at zero and quantitative easing only just coming to an end, US monetary policy is, as Russell Silberston of fund manager Ninety One says, “in utterly the wrong place” – hence why Jerome Powell appeared so keen to play catch-up last night. The Bank of England has moved a little more in the right direction but not much.
The US labour market has been tight for a while but it’s getting much tighter in the UK too. Unemployment is close to the pre-pandemic rate of 3.8pc and job vacancies have hit a new record high. This will likely fuel Bank fears that inflation is feeding into higher pay and things could soon start spiralling out of control.
