The Outlook for Vaccine Distribution and Global Growth

Primary Drivers of Slow Vaccination Rollout

• Limited supply is a contributing factor, but slow distribution is the primary bottleneck in several advanced economies.
• Insufficient planning is identified as the single most significant cause for the initial sluggish start.
• Global policymakers were unexpectedly optimistic regarding the speed of vaccine development relative to logistical preparation.
• Additional bottlenecks include underutilization of distribution channels, complex tiering/prioritization plans, and administrative red tape.
• Delays are exacerbated by countries withholding second doses in many instances.

Current Trends and Positive Shifts

• Cumulative vaccination numbers have fallen short of projections, though a daily trend upturn is already visible.
• U.S. daily vaccination rates have risen to nearly 800,000 doses per day in the most recent week.
• This acceleration aligns with economic, health, and political incentives to speed up deployment.
• Goldman Sachs expects bottlenecks to be temporary as policymakers adopt strategies from success stories like the UK and Israel.

Case Study: Israel's Success Model

• Israel has administered at least one dose to 25% of its total population and nearly 75% of those over six years old.
• Unique advantages include a fully digitized health system, compact geography, and crisis management experience.
• Replicable strategies include simple age-based tiering, large-scale vaccination centers, cross-sector worker mobilization, and medical sector overtime.
• Medical experts at the Weizmann Institute project a decline in hospitalizations by the end of January, with fatalities decreasing shortly after.

Updated Global Vaccination Timeline

• Significant acceleration is expected in major developed markets (DMs) beginning in February.
  • The U.S. plans to activate pharmacy distribution channels.
  • Germany intends to fully operationalize 400 mass vaccination centers.
• The vaccination curve is projected to steepen gradually through the spring.
• By May, developed markets are estimated to vaccinate 15% to 20% of their populations monthly.
• First-dose coverage targets:
  • United Kingdom: 50% by April.
  • United States: 50% by May.
  • European Union: 50% by June.
• Effective herd immunity in advanced economies is expected by the end of the summer, aided by prior infections.

Impact of New Virus Strains

• Increased transmissibility heightens pressure and incentives for rapid inoculation.
• A risk exists that surging hospitalizations could divert medical resources away from vaccination efforts.
• Higher viral contagion likely necessitates a larger vaccination share to achieve herd immunity compared to previous estimates.

Economic Growth Outlook and Risks

• Rapid vaccination is a core pillar of Goldman Sachs' optimistic global growth forecast for the year.
• Widespread herd immunity is expected to trigger a sustained recovery in virus-sensitive economic activities.
• Downside risks include the unprecedented nature of the distribution campaign and potential viral mutation.
• Upside risks include fiscal spending impacts exceeding expectations and a surge in pent-up demand ("party effect").