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New cases of coronavirus are declining but driven by fewer tests. Meanwhile, Israel is leading the vaccination race amid concerns about new UK variants but, altogheter, economists at Danske Bank are more optimistic on the 2021 economic outlook.

Key quotes

“We generally expect restrictions to be with us for a long time and there is a clear risk we see a renewed rise in infections in early 2021 due to Christmas and New Year celebrations. We know the virus spreads more easily when it is cold and people spend time together indoors, something which is especially true around Christmas and New Year.”

“The vaccination process continues in the US and the UK and has now begun in the EU after approval of the Pfizer vaccine just before Christmas Eve. Right now, Israel is leading the vaccination race when looking at doses administered per capita. We expect the vaccination process to accelerate in Q1 21. While a vaccine will not stop it being a long winter with many restrictions, we believe the vaccination process limits the need for restrictions next autumn. This is one reason we are more upbeat on the 2021 macro outlook.”

“Unfortunately, a concern is the new ‘UK variant’, which seems more infectious although not more deadly. Unfortunately, the new variant has now been found most places around the world, also among people with no travel history. At this point, we do not know how effective the vaccines are against this new variant but the good news is that we know that Pfizer and Moderna can change their vaccines within four to six weeks in the event the vaccines are ineffective.”