The economic hit from COVID-19 will be felt 'for a long time' even if a vaccine is ready in 2020, warns Raghuram Rajan

• The economic hit from the pandemic will last "for a long time" even in countries that managed to contain the virus, according to economist Raghuram Rajan.
• The long-lasting impact is inescapable even if several promising vaccine candidates are approved and rolled out as early as the fourth quarter of this year, he told CNBC on Wednesday.
• "You have to vaccinate a lot of people. So, the earliest people are going to feel safe going into crowded restaurants is probably going to be by the middle of next year."
• The pandemic has so far infected over 15 million people in the world and seen over 615,000 fatalities.
• Visit Business Insider's homepage for more stories.

Top economist Raghuram Rajan has warned that the brutal economic impact from COVID-19 will be felt "for a long time" despite the arrival of an approved vaccine.

"I think the hit is going to be with us for a long time," the former Indian central bank governor and IMF chief economist said on CNBC's "Street Signs Asia" on Wednesday.

The economic hit is inevitable even if any of the several promising vaccines currently in development are approved and rolled out as early as the fourth quarter of the year, Rajan said.

"You have to vaccinate a lot of people. So, the earliest people are going to feel safe going into crowded restaurants is probably going to be by the middle of next year."

His comments come amid recent developments of promising data from coronavirus vaccine trials that helped boost market sentiment this week.

Human-trial vaccine programs led by AstraZeneca, Moderna, and Pfizer have so far all been successful in generating immune responses from healthy volunteers.

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However, even those countries that managed to contain the virus can expect to operate only at a "95% economy" until there is greater confidence for people to mingle and for small businesses to reopen, according to Rajan, a professor at the University of Chicago.

"As this goes on, more and more businesses find that a long period without revenue, but high cost, implies that they simply don't have a chance, and they're closing down," he said, and added that economies are in for a much longer fight.

To control the effects of the downturn, he suggested governments must move from a stimulus directed at protecting everybody in the short-run to more protracted support for impacted sectors.

A rise in protectionist policies will only further delay economic recovery, and much of that damage will be in countries most dependent on commodity exports, he said.

Coronavirus has infected over 15 million people across the world and has seen over 615,000 fatalities, according to data from the Johns Hopkins School of Medicine.

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