This week's Capital Markets: First quarter indicators show poor bond price performance but accompanied by strong is… https://t.co/IPUHFRPu6L
Geopolitics of COVID-19 Vaccine Campaigns: Shared challenges
For the last year all eyes have been focused on the worldwide research and development race with one clear goal in mind: ending the coronavirus (COVID-19) pandemic. Entering 2021, multiple vaccines targeting COVID-19 are available for deployment with dozens more in a pipeline of clinical trials.
Governments now face the monumental task of vaccinating their populations at a scale and pace to drive forward their public health and economic recoveries. The first step for all nations is securing (adequate) vaccine supply to drive herd immunity levels.
Globally, advanced purchase agreements have been signed for a reported 9.59 billion vaccine doses. By mid-February, according to IHS Markit's COVID-19 vaccines advanced purchase agreements tracker, the United States alone had contracted for more than 1.2 billion doses; good news for the roughly 210 million adults in the US.
Elsewhere, fiscal constraints imposed by managing pandemic economies over the last year mean that not every country will be able to secure coverage for their entire adult populations. Pooled procurement methods like the WHO's COVID-19 Vaccine Global Access Facility (COVAX) framework have stepped in to alleviate this pressure, but with it initially promising to provide vaccines for up to 20% of participating country's populations, it is unlikely to be enough to achieve domestic herd immunity.
Looking ahead, beyond the clinical news and announced advance purchase agreements (APAs), it turns out that despite divergences around access, countries are facing a set of shared geopolitical challenges in administering their vaccine campaigns:
Reliance on external sources of vaccine supply
Thus far, vaccines developed in only a small number of countries have received some form of regulatory approval allowing for distribution. This suggests that into 2021, a wide number of countries will likely continue to depend on securing access to externally-developed (and in many cases externally-produced) vaccines. As we are already seeing, countries are looking to offset this risk by accessing vaccines from diverse sources - the US has APAs with six vaccine developers, both the United Kingdom and the European Union have signed deals with eight firms. Other countries are likely to become overly-reliant on narrower supply chains - opening the door for " vaccine diplomacy."
Vaccine producers leveraging "vaccine diplomacy"
Countries that have invested in vaccine innovation and production are now jockeying to be pivotal suppliers to vaccine importers as an expression of their soft power. Leading the news on vaccine bedfellows has been China's signage of bilateral APAs to deliver its vaccines across Africa (including in Equatorial Guinea, Senegal), Latin America (including Chile, Peru), Europe (including Ukraine, Serbia) and the Middle East (including Egypt, Morocco). With its Vaccine Maitri initiative, India has donated millions of its Covishield within its neighborhood "in keeping with India's stated commitment to use India's vaccine production and delivery capacity to help all of humanity fight the COVID pandemic."
Gap between sufficient vaccine supply and successful rollout
Securing supply agreements is a necessary but not sufficient condition to ensure an effective domestic vaccine rollout. Countries with leading APA numbers are struggling under a host of logistical and operational constraints to actually get jabs into arms. In the US, for example, coordination has been uneven between the federal government and distribution points at the state level, even as the pace of vaccinations has ramped-up. At the start of February, only a handful of states and territories had vaccinated double digit proportions of their populations. President Joseph Biden's National Strategy for COVID-19 Response and Pandemic Preparedness calls for additional funding and fair compensation for state and local governments along with clearer tracking and projections around vaccine availability to ease the US implementation bottlenecks.
Protracted vaccine rollout sets stage for civil unrest
Even as vaccine campaigns get underway, government containment efforts such as local and national lockdowns are likely to persist in the coming months. These restrictions impact government's revenue levels as economic activity remains below pre-COVID-19 levels. With public debt at historic levels for a number of countries entering 2021, fiscal stimulus packages and support benefits cannot persist indefinitely. As such packages phase out, especially where vaccination campaigns are slow to get off the ground, so grows the threat of protest activity. Already in January and February, anti-lockdown demonstrations took place across parts of Europe. In rare instances, dissatisfaction with government COVID-19 management will present existential obstacles to current leadership.
Undoubtedly, countries face unique logistical constraints in administering a once-in-a-lifetime COVID-19 vaccination campaign. But several months into these campaigns, the experience suggests there are as many commonalities as divergences. For now, most countries remain vaccine importers with vaccine exporters leveraging the benefit accrued to them by current vaccine scarcity to extend influence and soft power, but vaccine procurement alone is not enough to guarantee smooth vaccine administration. With high aspirations for health and economic recoveries in 2021, vaccine delivery will be a pressing pain point for leadership globally.
This article is the first in a series where we look at the Covid-19 vaccine rollout across the globe.
- NGFS proposes the inclusion of climate-related risk factors in central bank operations
- Capital Markets Weekly: Positive balance to bond indicators for Q1 2021
- Banking risk monthly outlook: April 2021
- Weekly Pricing Pulse: Supply issues support higher pricing
- Estimating non-payment risks in emerging markets
- Canada's Greenhouse Gas Pollution Pricing Act can move forward
- Terrorism in Mozambique’s Cabo Delgado province: Examining the data and what to expect in the coming years
- US Monthly GDP Index for February 2021
Our banking risk experts provide insight into events impacting the financial sector in emerging markets in April --… https://t.co/ipO7zjxWXa