You are here: Home » International » News » Economy
Business Standard

Unequal allocation of vaccines could cost the world economy $9.2 trn

Emerging and developing economies are vulnerable to richer countries hoarding their doses because their fragile health systems are straining under the weight of mounting infections

Coronavirus Vaccine | Coronavirus | world economy

Enda Curran & Michelle Jamrisko | Bloomberg 

European countries are already at odds over access to vaccines, just as they were over personal protective equipment a year ago

The global economy’s recovery risks being dampened or even derailed by the lag in vaccinations for poorer nations relative to their wealthier peers.

Bloomberg’s Vaccine Tracker shows 4.54 million doses were given on average across the world each day over the last week, but it’s far from an even spread. The US and UK make up about 40 per cent of the 119.8 million doses administered globally.

Developing and emerging markets are, by and large, doing far less well. In Africa, only Egypt, Morocco, Seychelles and Guinea are recorded as having given any of the vaccines at all. Much of Central Asia and Central America has yet to begin vaccinating, or is moving slowly.

That means emerging economies risk falling further behind economically and limits room for rebound even in fully-inoculated countries by depriving them of demand for their goods and a supply of manufacturing parts. Worse still, not combating Covid-19 everywhere may mean harder-to-contain mutations of the virus generate fresh health and economic crises.

"With the virus mutating, no country is safe until the whole world is inoculated and achieves herd immunity," said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte in Singapore.

A recent study commissioned by the Chamber of Commerce concluded an unequal allocation of injections could deprive the of as much as $9.2 trillion.

Similar research by Rand Corporation estimated the annual cost could hit $1.2 trillion. Global growth this year could be less than half the World Bank’s 4 per cent estimate if vaccine distribution doesn’t move quickly, said Chief Economist Carmen Reinhart.

Such calculations put rich nations under intensifying pressure to share their vaccine stocks, even though their publics may not support such generosity. Yet the signs point to ongoing hoarding.

European countries are already at odds over access to vaccines, just as they were over personal protective equipment a year ago. A program aimed at enabling access to vaccines is being underfunded by the biggest economies.

In China, which has paced the global economic recovery after getting the virus under control, a lack of urgency means it is now lagging the West in its rollout of vaccines, according to analysis by Gavekal Dragonomics.

Rand estimated that so-called vaccine nationalization could end up costing high-income countries $119 billion per year versus a $25 billion price tag for supplying low-income countries with vaccines. The US and Germany would face the biggest hit in absolute terms from the lack of a global inoculation, according to a December report.

Meantime, the study sponsored by the Chamber of Commerce and written by academics from Koc University and the University of Maryland reckoned 49 per cent of the economic cost of a lingering worldwide pandemic would be borne by advanced economies even if they enjoy total vaccination.

Almost half of respondents in a survey of executives by Oxford Economics Ltd. see activity in their business remaining below pre-pandemic levels throughout 2021. More than four in five respondents flagged repeated pandemic waves as a significant or very significant risk over the medium term.

Emerging and developing economies are vulnerable to richer countries hoarding their doses because their fragile health systems are straining under the weight of mounting infections, they lack the resources to generate and distribute vaccines as fast as their wealthier peers, and foreign investment is flowing to safer locations.

Take Indonesia. It’s the world’s fourth-largest and home to 274 million people, yet Covid-19 cases and deaths have accelerated at record paces. Almost half a million people received a first dose of the vaccine by end-January, falling short of a government goal of 598,400 that month. The nation is currently one of the least-vaccinated populations across 66 nations, at 0.30 doses per 100 people as of Feb. 5, according to Bloomberg’s Vaccine Tracker.

The Peterson Institute for Economics spelled out the dilemma posed by so-called vaccine nationalization bluntly in a report published this week titled: "The pandemic is not under control anywhere unless it is controlled everywhere."

"If you have public health out of control somewhere, it’s not just a local economic problem, it’s a global economic problem," said Monica de Bolle, a senior fellow at Peterson and one of the report’s authors. "But, unfortunately, I’m not sure anyone is gearing up to actually do anything about it."

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, February 05 2021. 07:35 IST