The world economy is recovering from the depths of the Covid-19 crisis. But that crisis will not depart for good until the pandemic is under control. Since the virus knows no frontiers, it cannot be under control anywhere unless it is under control everywhere. The alternative is for us to remain inside national prisons indefinitely. Alas, that is what we risk if leaders do not raise their gaze from their own countries.
In its January World Economic Outlook Update, the IMF projected global economic growth at 5.5 per cent this year and 4.2 per cent in 2022. Moreover, its “2021 forecast is revised up 0.3 percentage point relative to the previous forecast”. The global contraction in 2020 is also now thought to have been 0.9 percentage points less than previously expected. Still, it was the worst recession since the second world war and had especially devastating effects on women, the young, the poor, people employed informally and those working in contact-intensive sectors.
Losses relative to pre-pandemic expectations are large and likely to prove permanent. They will turn out to be a form of “long economic Covid”. As the World Bank’s Global Economic Prospects report notes, this is partly due to the damage done to investment and human capital. It is also due to the combination of pre-existing economic weaknesses with increased fragilities, especially the big jump in debt. One of the report’s chapters is entitled, “Heading into a Decade of Disappointment”. That is plausible and disturbing.
A precondition for limiting long-term economic and social damage is bringing the virus under control. Only then can we hope to return to normal life. Indeed, no event since the second World War has better demonstrated the limits of national autonomy. A recent paper published by the National Bureau of Economic Research argues that “up to 49 per cent of the global economic costs of the pandemic in 2021” will be borne by advanced economies even if they achieve universal vaccination at home. This is due to the networks of production and trade that bind countries together. No economy is an island.
As Tedros Adhanom Ghebreyesus, director-general of the World Health Organization, has argued, "vaccine nationalism harms everyone and protects no one". Moreover, the costs of an inward-looking policy of "health in one country" are not just narrowly economic. It also implies long-term limits on cross-border travel for all purposes.
Harmful mutations
More important still, it increases epidemiological risk. The more widespread the virus, the greater is the likelihood of harmful mutations. Already, the arrival of such mutations suggests the need for a long-term effort to adapt the vaccines, quite apart from developing better treatments. Covid-19, it is increasingly clear, will be a long haul.
It must also be a global haul. Yet a cursory glance at global vaccination rates shows there is instead a race to vaccinate local populations, with wealthy countries well in the lead. Among large rich countries, the UK is currently ahead, with 19.2 doses administered per 100 residents. In the Republic, this figure is just below 5 (according to Our World in Data), while it is just 1.7 doses globally.
This outcome may have been inevitable given political pressures – even though, as many argue, it would be better to vaccinate the vulnerable and the most significant workers (such as teachers) everywhere, before moving on to the less vulnerable and significant anywhere.
Yet what was not inevitable was the gross underfunding of the effort to produce and distribute vaccines for the world.
As things stand, Covax – the effort to make and distribute vaccines globally – hopes to deliver 2.3 billion doses this year. But even that would cover only about a fifth of its target population, far too few to achieve herd immunity. Planned supplies are also heavily backloaded this year. The bulk of the necessary vaccinations will now happen in 2022 and 2023. That is far too late. Indeed, already by next year, it may be vital to revaccinate early recipients with modified vaccines.
Money is a crucial issue. At the end of last year, the Covax Advance Market Commitment, which buys doses in advance for poor countries, had $2.4 billion. With promises made since then, it needs another $2 billion to pay for doses due just this year. The total vaccination effort will probably cost $35 billion and more with the likely need for regular revaccination. It will cost still more if an effort is made to accelerate vaccine production and distribution this year. Moreover, the ACT (Access to Covid-19 Tools) Accelerator – of which Covax is a part, but which also includes treatment and testing – has a $27.2 billion funding gap today and will need more again in future.
Fiscal cost
According to the IMF, advanced economies have already announced $5.6 trillion in extra fiscal spending in response to Covid-19. And that is only a part of the total fiscal cost. The money needed today by the ACT Accelerator is just 0.5 per cent of this sum. Even if the money needed to accelerate vaccine production and distribution for global use were to be $100 billion, that would be an error term compared with the pandemic’s fiscal costs, let alone the huge health and other costs it has imposed.
Scientists have achieved miracles with the vaccines. Now the world’s leaders have just to show elementary common sense. They must do “whatever it takes” to finance accelerated production and distribution of vaccines – and, if necessary, reformulated vaccines – globally.
This is the only way for us to regain any sort of normality. Nothing should be allowed to get in the way. This is a global war and our species is not yet winning. That has to change, from tomorrow. – Copyright The Financial Times Limited 2021
