The COVID-19 pandemic was the greatest threat to prosperity and well-being the world economy has ever experienced. We can observe it on the example of the US (Figure 1): GDP growth rate in the United States averaged 3.18 percent from 1947 until 2021, reaching an all-time high of 33.80 percent in the third quarter of 2020 and a record of low of -31.20 percent in the second quarter of 2020, when the world was starting to recover from COVID-19.
According to IMF (International Monetary Fund), the global economy is projected to grow 5.9 percent in 2021 and 4.9 percent in 2022. With the introduction of vaccines against COVID-19, access to vaccines has become mainline of the gap along which the global economic recovery is divided into two blocks: countries that can count on the normalization of economic activity towards the end of this year (almost all of the countries with developed economies), and countries that continue to face new outbreaks of infections and an increase in the number of deaths from COVID-19. So it’s fair to analyze the contribution of vaccination on economic recovery in the context of the existing gap, and to do so we can consider two factors.
In developed economies (Figure 2), almost 60 percent of the population is fully vaccinated, while in emerging market countries the proportion of vaccinated is slightly higher than half of this level, and in low-income countries, this figure is 14 times lower. Getting vaccinated can help improve people’s health and well-being and let them return to the workforce. Due to the high vaccination rates, the labor productivity of citizens in developed economies increases, which allows them to recover much more quickly economically compared to the other countries.
A steady rise is not guaranteed anywhere, as long as certain segments of the population remain susceptible to the virus and its mutations. The economic recovery is severely constrained in countries under the impact of new waves of diseases. (Ex. India) According to Robert Bollinger, Raj and Kamla Gupta Professor of Infectious Diseases, some of these strains may allow the coronavirus to spread more quickly, resulting in more people becoming really sick or dying. Because low-income countries possess fewer medical resources, it makes it even harder for them to accelerate their economic recovery in case of new waves of COVID-19.
If we look at UNDP’s economic growth rate forecasts given vaccination rate in February 2021 for more than 195 countries (Figure 3), we can observe an impact of vaccine inequity on economic growth. High-income and upper-middle-income nations are predicted to recover faster than expected, due to higher vaccination rates, with the latter group experiencing a U-shaped recovery. At the same time, economic growth predictions for lower-middle-income and low-income nations have been significantly revised downward in both groups of countries.
Because low-income countries are heavily affected by vaccination, their economic recovery is not only slower than in other countries but also is much more vulnerable to critical factors. This effect of vaccination on global economic growth can result in an even bigger economic gap between countries, thus in obstacles in international trade and relations.