My opinion is that Westpac won't be paying a dividend for the...

My opinion is that Westpac won't be paying a dividend for the next couple of halves. We are only at the very beginning of this crisis. The economy will not be able to reopen to pre-Covid levels until we have a vaccine.

I probably sound very pessimistic, but let me try to explain. I am not a banker, mining engineer, or economist. Usually, I cannot offer an expert opinion on HotCopper. However this time around I can. I'm an immunologist, and I've been following this virus since the beginning. I could write a very long piece on why I think the economy is not going back to normal any time soon, but I'll summarise it below.

This is a very difficult virus. First, it is incredibly contagious. Second, very unusually for a respiratory virus, it can be spread before people develop symptoms, and by asymptomatic and mild cases. This means it is very difficult to prevent outbreaks from occurring, even if you are using track and tracing procedures such as the Government are implementing. Now Australia has avoided the death toll in Europe. But it was only able to do this by bringing strict policies into place which are obviously affecting the economy greatly. So the real question is...can Australia go back to normal and avoid reigniting the virus? I don't think it can. I think it's quite obvious in fact, that this is not possible. We are already seeing new outbreaks in countries like South Korea, Singapore, and Italy after they have only partly relaxed their lockdowns. It only takes a small collection of people to spread the virus throughout the country. If we all go back to work and to normal, it will spread again.

Now it's good that this virus is not as lethal as we feared back in March. The vast majority of deaths are over 65. But a significant number of people are still dying. In the UK for example, 32.5K to date. Remember this is with a severe lockdown and if they had not had a lockdown the models predicted at least 200k deaths.

There are currently no drugs that really help with Covid. The only one that has shown promise, the antiviral remdesivir, only helps a proportion of patients that were going to recover anyway, recover quicker in hospital. This is helpful, but it has no effect on the people that were going to die anyway, so it won't save your life. Added to that remdesivir is very difficult to produce, and cannot be made in large quantities. Gilead has promised a million doses by the end of the year, but have a think about how many will actually be required around the world..... The drugs that may stop people dying are biologics, things like recombinant antibodies that target inflammatory factors like IL-6, Il-1b and TNFa to prevent cytokine storm...these are extremely expensive and difficult drugs to make in large quantities, so very few doses will be available.

So we can't go back to full normal until we have a vaccine. And although it is depressing (sorry guys!) it's also worth remembering there is no guarantee we will have a vaccine in the next year. The record for the fastest production of a new vaccine is 4 years. Now there has never been this much money and this many groups working on a vaccine in history so I would bet that we will have eventually have one...but we can't depend on one. Added to this, the vaccine may only be effective in a percentage of the population. The older you are the less effective vaccines are, this is because your immune memory diminishes with age, particularly over the age of 65...and they happen to be the people who most need it.

Personally I think most world governments will put their countries through cycles of strict lockdowns followed by relaxed lockdowns. When the virus waves come back, we go into lockdown and cases diminish, and things will relax for a time. The Imperial College London model for the UK states that these severe lockdowns should last around 2-3 months and the relaxed periods are 3-4 weeks, and even during these relaxed portions pubs and restaurants, shopping centres and sports cannot reopen. It's worth noting their modelling from early March has been pretty much on the money so far.

Sorry for the long and depressing post but hopefully you can see why I don't think this will be a quick recovery. To really study the effect this will have on the economy we need to understand the science.