The OECD’s latest Economic Outlook offers a comparatively rosy picture for any recovery from covid as public health conditions continue to dominate the economy. With highly effective vaccines now rolling out across much of the developed world, and the US’ massive stimulus programme kicking in, the thinktank has revised its global growth forecast for the year up from 4.2% to 5.8%.
But whilst vaccine success stories like the US and South Korea are forecast to hit their pre-covid levels of GDP per capita before the end of this year, the recovery looks exceptionally uneven as countries that have suffered the most during the pandemic, and those deprived of vaccines, set to remain severely depressed for some period of time. Neither South Africa nor Argentina are expected to recover fully until at least the end of 2024. Britain, meanwhile, on the back of its full-throttle vaccine programme, is forecast to grow strongly – held back, notably, by what the OECD expects is lengthy “scarring” from the pandemic.
The forecasts help illustrate the wisdom of the International Monetary Funds call for a comprehensive, $50bn global plan to distribute vaccines on a mass scale, including the removal on trade restrictions for vaccines, and the scaling up of production facilities and genomic monitoring to guard against future mutations. The scale of the Fund’s ambition is huge, wanting 40% of the global population vaccinated by the end of this year: at the time of writing, around 11% of the world’s population are vaccinated, heavily concentrated in the richer countries. Just 2% of the population of sub-Saharan Africa are estimated to be covered.
No-one is safe until everyone is safe
As the Fund, or the World Health Organisation, or any credible observer has been pointing out, until everyone is safe, no-one is safe: the danger from an unvaccinated population is that, as we are seeing with the so-called “Indian” variant, new mutations in the SARS-Cov-2 virus will arise, and have the potential to be more infectious (and perhaps more virulent) than the existing strains, and spread rapidly. Failure to deliver widespread immunity, ideally through vaccination, creates a permanent risk of outbreaks – with the huge economic consequences that follow.
Vaccinating the great majority of the world’s population in short order is hardly easy – arguably creating the greatest single logistical challenge humanity has ever faced – and the technical complications in producing and distributing the vaccines are worsened by the strong incentives countries face to skimp on supplying vaccines to others. It remains to be seen whether a push by the IMF and other economic agencies can start overcome this huge co-ordination failure where the global health agencies have not; but until it does, and until we can be more confident of mass global immunity, projections for future growth like those from the OECD have to be subject to the very major risk of future outbreaks. At the very least, the sheer cost and nuisance of the expanded biosurveillance measures now being implemented, like regular tests and vaccine certification, alongside the continued need for social distancing suggest long-term growth prospects for the global economy have been significantly reduced.