In his address to the National Press Club this week, Reserve Bank of Australia governor Philip Lowe observed that while our economy had done better than expected, it will still be well below where he had thought we would be pre-pandemic - "despite the positive economic news over recent months, we still have a way to go".
Specifically, Lowe said: "The economic downturn from the pandemic was not as deep as was initially feared and the bounce-back has been earlier and stronger than what we had been expecting ... we are expecting the level of GDP to return to its end-2019 level by the middle of this year."
Although, he noted: "When the national accounts are published for the December quarter, they are likely to show that the level of GDP is 4 per cent lower than where we thought it would be a year ago."
Lowe emphasised that looking ahead "much depends on the path of the pandemic" and while "the development of vaccines in record time is clearly good news ... the rollout of vaccines faces challenges ... we need to be prepared for further setbacks in what remains a highly uncertain world."
There are (at least) three significant questions in relation to the vaccine to which we don't yet have satisfactory answers.
First, just how quickly will the vaccines be rolled out and, in turn, how quickly can countries that have been successful in vaccinating their populations begin to remove restrictions?
The UK has had some success so far at mass vaccination, but it has maintained economic lockdowns and restrictions on social interaction. China has been tightening restrictions ahead of the Lunar New Year holiday.
Second, will the vaccines that are "on the market" (or in the final stages of development) be effective in combatting the new mutations of the COVID virus?
Obviously the jury is still out on this, but early doubts have arisen about the South African variant, which could add to political pressure to maintain lockdowns and restrictions, further blocking international travel.
Third, how much genuine international co-operation can we really expect when it come to the allocation of vaccines?
The evidence to date hasn't been encouraging - rich countries have been buying up vaccines to the detriment of poorer countries (some countries within the EU such as Hungary, breaking out to contract with Russia separately).
Then there's the worrying reports that AstraZeneca is favouring the UK over other European countries, so that UK has apparently inoculated about 8 per cent of its population, and EU only 2 per cent.
While the third question is getting most of the attention, the first is probably the most important, and nobody seems to have a clue how or when countries that have pursued mass vaccinations can afford to reopen their economies.
This is particularly important for Australia. Our absolute and relative success in containing the domestic transmission of the virus, even conceding the hiccups in quarantine, is mostly due to being able to isolate ourselves as an island - by effectively closing our international border.
Notice the concentration in the daily count of cases "in hotel quarantine", clearly indicating how easy it would be for us to import the virus, and for that to initiate significant and rapid domestic transmission, if we opened our borders prematurely - even with our now sophisticated contact tracing capabilities.
It is clear that closing our international border has had a very significant detrimental impact on two of our larger industries: international tourism and education (most noticeably universities). Both are significant employers and exporters, and it will take many years to recover.
The uncertainties of the vaccine rollout compound their recovery strategies, and will no doubt intensify the political pressure for financial assistance to these sectors.
Indeed, it is surprising and disturbing that they have received so little support to date.
While it is expected that the likes of Lowe and government ministers will put their best foot forward when it comes to speaking of the "way forward", the risks - both domestic and international - are great.
Beyond the virus and vaccines, the uncertainties of the transition from JobKeeper, the collapse in our birth rate and immigration, the longer-term impacts of the significant changes in behaviour driven by the pandemic - the way we live, work, travel, spend, save and so on - and the lack of longer-term vision and planning by governments suggest some very real "bumps in the road" to come towards a sustainable recovery.
John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.
