Geopolitics of COVID-19: Delta variant
The World Health Organization (WHO), in its weekly epidemiological update on 30 June, said that so far the Delta variant of the coronavirus disease 2019 (COVID-19) virus has been detected in 96 countries, including 11 new locations in one week alone. Although reports vary about the transmissibility of the Delta variant, it very likely behaves in a similar way to other variants such as the Alpha, in terms of transmissibility and incubation period.
Despite the greater relative accessibility of COVID-19 vaccines, the spread of the Delta variant in Europe is likely to delay the easing of certain emergency measures, undermining the EU-wide vaccine passport.
The number of people infected with the Delta variant has increased in several European countries in recent weeks. Despite a very high inoculation rate - just under half of the population were fully vaccinated by the end of June - infection rates in the United Kingdom have grown. In Portugal, there has also been a drastic increase in the incidence rate of the Delta variant, which accounts for every second new infection in the country, and 70% in the greater Lisbon area. Meanwhile in Germany, the Delta variant was responsible for 15% of all new infections. According to the European Centre for Disease Prevention and Control (ECDC), the Delta variant is likely to account for 90% of new COVID-19 cases in Europe by late August. These developments are prompting governments to reverse or delay plans to relax restrictions. The spread of the Delta variant also risks undermining the EU Digital COVID certificate (EUDCC), which took effect on 1 July and aims to facilitate travel within the European Union.
The Delta variant very likely exacerbated the COVID-19 situation in India during the second wave in April-June 2021, with sub-variants and easing of lockdowns sustaining a risk of an increase in infections again after July.
The Delta variant accounted for the highest number of COVID-19 cases during India's second wave, which lasted from mid-April to mid-June. At its peak on 6 May, India recorded over 414,000 COVID-19 cases, the highest single-day tally globally. The impact of the second wave was compounded by India's fragile healthcare system, with widespread shortages of oxygen support, hospital beds, medical supplies, and testing capacity, as reported in the national media. This portends similar risks in other countries with weak healthcare systems, as now seen in sub-Saharan Africa. Despite the humanitarian toll, Indian Prime Minister Narendra Modi's government will very likely remain stable, without requiring cabinet or administrative-level resignations. His foreign policy agenda, however, particularly as it relates to vaccine diplomacy (officially called Vaccine Maitri), has been halted since April given the need to prioritize domestic inoculation. A ban on vaccine exports by the Serum Institute of India - likely until the end of 2021 - has destabilized the COVID-19 Vaccines Global Access (COVAX) initiative, directed by the Gavi vaccine alliance, delaying domestic inoculation plans in African, Latin American, Middle Eastern, and Southeast Asian countries.
The Delta variant is likely to exacerbate growing numbers of COVID-19 infections across sub-Saharan Africa.
In 22 African countries, cases rose by over 20% in the week ending 13 June. During the same week, reported deaths rose by nearly 15% in 36 countries. Export disruption from India, and a lack of domestic supply, have seen many countries in the region exhaust their vaccine stocks, delaying the already slow rollout of COVID-19 vaccines. As a result, governments will rely on localized lockdown regulations to contain COVID-19 infections over the next six months at least. During such lockdowns, governments will be eager to allow business travel and cargo movement and limit the economic disruption caused by lockdown measures. However, in southern Africa, authorities will probably close land borders or introduce restrictions, leading to delays of between two and five days to cargo deliveries across the region.
The growing incidence rate of the Delta variant across the Middle East and North Africa (MENA) region is likely to slow the easing of restrictions on movement and the tourism sectors of those states that have developed the most advanced vaccine rollout programs.
Israel has double-vaccinated approximately 80% of its over-16 population. The Israeli government is likely to limit foreign tourism to travelers with proof of double vaccination and to continue to enforce mask-wearing in public. Overall tourism travel across the MENA region is unlikely to recover in 2021, particularly in Gulf countries. Although most Gulf states have relatively high rates of vaccination, their reliance on migrant labor and the international travel hubs in Dubai and Doha have made them more vulnerable to influxes of new virus variants. Additionally, the United Arab Emirates (UAE) and Bahrain prioritized early access to Chinese vaccines for their universal rollout programs, but these vaccines have proved significantly less efficacious against the Delta variant.
The spread of the COVID-19 virus is likely to accelerate across Latin America in the coming weeks given the low vaccination rates in the region, raising calls for governments to expedite vaccine procurement and rollout efforts.
Latin American countries began reporting their first Delta variant cases in recent days, although given overall low testing levels, it is highly likely the variant is already more widespread than acknowledged. At the time of writing, the sole country to have taken explicit action to stop the spread of the Delta variant is Argentina, which on 28 June announced further restrictions for incoming air travelers. Region-wide, vaccine rollouts have been sluggish on average, with only Chile and Uruguay having vaccinated more than 60% of their populations with at least one dose. During the first quarter, Russia and China signed purchase agreements for their vaccines with multiple countries in the region, although deliveries have fallen behind initial expectations. More recently, the United States announced a 14-million-dose donation of Moderna, Pfizer, and Johnson & Johnson vaccines to several Latin American countries, including Argentina, Colombia, and Panama.
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This week in Capital Markets was so busy we had to offer a second installment! Both Nigeria and Egypt have complete… https://t.co/ueTSvxnzZz