It would be hard to find an example of a government intervention that has done more good than vaccination efforts against coronavirus. As well as the obvious health benefits, immunising as many people as possible — starting with the most vulnerable — has allowed economies to unlock, workers to return to offices and emergency support measures to wind down. That has helped to produce an economic bounceback in the rich world that has more than paid off the amount invested in vaccinations.
Yet as the IMF points out in its World Economic Outlook, published on Tuesday to coincide with the Fund and the World Bank’s annual meetings in Washington, vaccination efforts are shockingly uneven. That will hold back the global economic recovery: poorer countries will lag even further behind rich ones that have also been better able to use fiscal and monetary stimulus to support their economies. It is imperative now that rich countries make good on their promises to donate vaccines to the Covax initiative, which aims to ensure equitable global access. They should also lean on drugs companies to do their part in ensuring poorer countries gain access to life-saving jabs.
The IMF warns that the momentum behind the global recovery has faded. It rightly notes current supply chain disruptions underline the need for central banks to be “very, very vigilant” over spiralling inflation expectations getting out of hand. But it identifies the fundamental problem as “the continued grip of the pandemic on global society”. Not only is this holding back the recovery in international services trade such as tourism, and contact-heavy activities such as hospitality; it is also contributing to the supply chain troubles as coronavirus outbreaks have led to factory shutdowns. Global co-operation to immunise the developing world, then, is not only a humanitarian good but in rich countries’ self-interest.
However, only about a fifth of the 850m doses pledged by G7 countries to Covax in June had been delivered by September. It is understandable that governments were reluctant to give away scarce vaccines earlier this year when rich countries themselves were bitterly divided over exporting them to one another. But given the success of rollouts to date, it is now largely vaccine hesitancy rather than supply issues that is holding back take-up among those still unjabbed in rich countries. Now that economies are reopening, export controls should also be eased on medical equipment.
The pace of vaccinations is one of the biggest influences on the IMF’s estimates of “medium term scarring” from the pandemic. While, in aggregate, rich economies are expected to be 0.9 per cent bigger than before the pandemic by 2024, poorer countries, excluding China, are expected still to be 5.5 per cent smaller — undoing much of the poverty reduction over the past decade. The US, thanks to extraordinary stimulus efforts, is expected to have “negative scarring” as Covid-19 accelerated efforts to renew infrastructure, as well as the green transition.
Vaccine manufacturers, too, have a duty to do more to increase access to their products and lower the cost. While Moderna and BioNTech, which produces a vaccine with Pfizer, have both pledged to move production to Africa, details are still scant and it will take time for such production to come online. As the IMF points out, the longer the pandemic continues, the less able countries will be to keep on spending to offset the continued economic harm. Rich countries got a head start in the race to vaccinate; now, in everybody’s interest, they must redouble their efforts to help others catch up.
Source: Economy - ft.com
