Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Domestic innovation and production capacity of coronavirus
disease 2019 (COVID-19) vaccines have uniquely positioned China and
India to be pivotal suppliers of vaccines within the Asia-Pacific
region, and elsewhere. The development and production of COVID-19
vaccines are key political priorities for both countries, driven by
geopolitical considerations and made possible by domestic
manufacturing capabilities. Beijing is seeking diplomatic advantage
in an increasingly adversarial external environment by providing
vaccines to other countries. Sinovac Biotech has confirmed advanced
purchase agreements (APAs) with Brazil, Chile, Indonesia, Malaysia,
Mexico, the Philippines, Turkey, and Ukraine, while fellow Chinese
company Sinopharm has agreements with Egypt, Morocco, Pakistan,
Peru, and the United Arab Emirates. China's external push, however,
will likely be marred by concerns about the reportedly low efficacy
of its vaccines and poor transparency in declaring results of
testing regimes. Reports of increasing domestic COVID-19 cases -
notably in the provinces of Hebei and Heilongjiang - will probably
also oblige China to prioritise local distribution ahead of
exports.
China's domestic constraints are likely to give an advantage to
India's vaccine diplomacy program, known as 'Vaccine Maitri'. India
has the benefit of both extensive manufacturing capability -
production of Covishield is expected to reach 100 million monthly
doses by February 2021 - and higher reported vaccine efficacy.
(Covishield is a licensed version of the Oxford-AstraZeneca vaccine
manufactured locally by the Serum Institute of India, the world's
largest vaccine manufacturer before COVID-19.) India has already
sought to counter growing Chinese influence in the region by
donating millions of Covishield doses to nine Indian Ocean
countries, including Bangladesh, Mauritius, Nepal, Seychelles, and
Sri Lanka. Additional non-regional, commercial deliveries have also
been scheduled for Brazil, Morocco, Saudi Arabia, and South
Africa.
Logistical and healthcare limitations will protract
rollout completion
Major Asia-Pacific economies have already started - or aim to
start - vaccination programs in the first quarter of 2021, with
almost all countries prioritizing healthcare and frontline workers.
A risk-positive development is the rapid development of cold chain
infrastructure in advanced and emerging Asia-Pacific countries,
involving private-sector efforts to complement state capacity. This
will assist vaccine rollout, whose progression will likely enhance
business confidence and reduce the need for national lockdowns.
However, rollouts in most countries faces a high likelihood of
being extended into at least 2022. Large disparities in road
infrastructure and healthcare provision are widespread within the
region, potentially causing the most significant delays in
countries with a high density of rural populations. Challenges
facing these countries in supplying peripherals - such as syringes
and personal protective equipment (PPE) - will further complicate
rollouts. Consequently, the risk of localized lockdowns will
persist throughout 2021 in specific regions with outbreaks. For
instance, business and movement restrictions will likely be
loosened in India, Indonesia, Malaysia, and the Philippines,
whereas delays in rollout and new outbreaks would trigger
region-specific lockdowns in Australia, Myanmar, Pakistan, and Sri
Lanka. Throughout 2021, Hong Kong SAR, Taiwan, and Thailand will
probably continue to have limited movement restrictions, whereas
stringent lockdowns are most likely to be imposed in mainland China
(around the Chinese New Year in February) and in Japan (in the
run-up to the postponed Tokyo Games in July).
Successful vaccine rollout key to economic
recovery
A successful rollout of vaccination programs will be critical,
particularly in major economies in which consumer and business
demands are key growth drivers. IHS Markit estimates real GDP
growth for the Asia Pacific at 5.7% for 2021 - the strongest
regional expansion since 2010. The sharp rebound in economic
activity, however, will primarily be due to favorable base effects
after a weak 2020. Moreover, given that GDP growth reached 7.1% in
2010, this recovery is not especially robust, considering the
magnitude of the contraction in 2020.
A meaningful recovery for most countries is unlikely until they
return to their pre-pandemic levels of real GDP output in 2021-22.
This is underpinned by the importance of expanding private
consumption and fixed investment in several countries where these
account for 70-80% of GDP (except for outliers like the Philippines
and Singapore). Achieving high demand-driven growth is very
dependent on successful vaccine rollouts, with the highest risk
facing geographically remote and dispersed economies. Furthermore,
many governments are likely to start unwinding pandemic-related
fiscal stimulus measures in 2021, which will almost certainly drag
on growth. They are also likely to reprioritize other spending
towards vaccination campaigns, although that would not offset
broader budget trimming efforts.
Posted 11 March 2021 by Anton Alifandi, Associate Director, Country Risk, IHS Markit and
Asad Ali, Head of Asia Pacific Country Risk Team, Country Risk & FCM, IHS Markit and
Bree Neff, Director, Economics & Country Risk, IHS Markit and
David Li, Principal Asia Analyst, Economics & Country Risk, IHS Markit and
Deepa Kumar, Deputy Head of Asia-Pacific Country Risk Team – Asia-Pacific Country Risk, IHS Markit and
Hannah Cotillon, Senior Analyst, Asia-Pacific Country Risk, IHS Markit and
Sacha Baggili, Senior Analyst, Middle East, Africa and Indian subcontinent, Life Sciences, IHS Markit and
Sophie Cairns, Senior Research Analyst, Life Sciences
