First and foremost is uneven access to vaccines—each economy’s growth hinges on vaccine availability and efficacy.
Second, domestic policies, which vary across countries, significantly impact the pace of economic recovery.
Third, the pace of recovery will also depend on country-specific structural factors, particularly reliance on high-contact sectors, such as tourism.
Furthermore, advanced economies and developing countries vary in their capacities to execute short- and long-term recovery strategies. This has a direct impact on their abilities to recover. (Therefore) advanced economies are projected to recover faster than emerging market and developing economies.
Advanced economies had the fiscal space at the beginning of the crisis to implement effective stimulus measures, and many now can quickly roll out vaccines. This bloc tends to have larger work-from-home flexibility in conducting business as they generally have higher technology intensity in the production process and digital infrastructure.
Conversely, developing countries historically do not have as much room in their budgets to stimulate their economies, and have not been able to vaccinate their populations as quickly as advanced economies. Lacking access to vaccines effectively places a ceiling on growth, and some estimates project that developing economies will not have widespread access to vaccines for several years. Businesses in developing economies tend to depend more on face-to-face interactions and have fewer work-from-home jobs. In the meantime, developing economies will likely suffer from economic scarring, or long-term effects.
From a global perspective, this crisis will continue to have echo-effects long after the virus is contained. With each passing day we have some more insight into how the virus has affected the global economy. While it is too early to understand the full picture, for now we can see simply that growth has a double ceiling: virus containment and vaccine access. Until the virus is controlled, we will continue on a bumpy, uneven road to recovery.
New Variants and Poor Access to Vaccines Threatening Global COVID Recovery Recovery
The global economic recovery is at risk from the rise of new coronavirus variants and poor access to vaccines in developing countries.
From the 2021 G20 Final Communique:
“The recovery is characterized by great divergences across and within countries and remains exposed to downside risks, in particular the spread of new variants of the COVID-19 virus and different paces of vaccination”.
The highly transmissible B.1.617.2 (Delta) variant continues to spread across the United States at a rapid pace. Early data suggest that B.1.617.2 now makes up more than 50% of COVID-19 cases. In some parts of the country, this percentage is even higher, especially in areas with low vaccination rates. This rapid rise is concerning and threatens the progress the United States has made toward ending the pandemic.
We can hope for -and also expect- the long sought global COVID recovery, and return to normalcy that we all deserve. Our lives and livelihoods depend on a stable society and economy; we are in need of the circumstances and surroundings that will lead us to our best outcomes.
On that note, the investment advisors at BAI Capital are available to assist with any of your property, real estate equity and immigration investment questions that you may have.
Stay tuned for next week’s email with our analysis of Stock Market Summer Trends as well as other key economic indicators to help you make your best move.