As countries around the world race to get their populations vaccinated, economists are closely watching for correlations between COVID-19 vaccine rollouts and economic recovery.
By Zilla Efrat
AMP Capital’s chief economist Shane Oliver is quick to point out that the vaccination process has only been going for about five or six months. “So there’s not enough data to assess it by.”
However, he does believe there may be a correlation between a country’s success in handling lockdowns and the speed of its economic recovery, especially in parts of Asia.
“Their governments were driven by expert advice, where populations were relatively compliant and not as ideologically focused. They seemed to do better.
“However, countries that didn’t rely on expert advice or enforce their lockdowns tended to suffer more.”
Deloitte Access Economics partner Kristian Kolding agrees, saying similar strategies have helped countries like Australia and New Zealand.
“Australia is a little island locked away from the rest of the world, and therefore it managed to suppress the virus. That has been the key driver of our economic success over the past six to nine months.”
Oliver confirms this by noting that Australia’s economy is one of a few to see economic activity, as measured by GDP, rebound and even exceed its pre-COVID-19 level.
Australia falls behind in vaccinations
The risk now, however, is that Australia has fallen behind other countries in its vaccine rollout. Indeed, many countries that struggled with containing COVID-19 are now well ahead of Australia when it comes to vaccinations.
“If you look at countries like the United States and the United Kingdom, they are almost the ‘poster children’ for the effectiveness of vaccines,” says Kolding.
“They’ve been able to roll out millions of vaccines over the past six months, and this has been core to the recovery they are now enjoying.”
Oliver adds: “Canada has gone from nothing to being one of the most vaccinated countries in the developed world.
“Europe is starting to catch up. Japan, which had a low vaccination rate and then a spike in cases, has recently overtaken Australia in terms of the percentage of its population that has been vaccinated,” he says.
Because of the way Australia has managed the pandemic so far, its economy is in a better economic position than many countries harder hit by the pandemic, although the economic impact of the current outbreaks is yet to be assessed.
“The number of jobs in the US is 5 per cent below where it was prior to COVID-19. In Australia, it’s 1 per cent above. We have more employment than we had before,” Oliver says.
“Other parts of the world have been hit a lot harder, such as Europe. It may take several years for the continent to get back to where it was, and that’s because of more serious lockdowns. Some emerging countries may also take longer as well.
“We could have a multi-speed recovery from this, where various countries accelerate initially and then they pull back when they potentially get hit by coronavirus variants if they haven’t been fully vaccinated.”
Experts agree that, to avoid a multi-speed economic recovery, the international community must work together.
“The developed countries need to be careful. If they just vaccinate themselves and not other countries, they will pay a cost for it anyway. It will mean that their own growth potential is lower because of weaker growth in the emerging world,” Oliver warns.
Kolding agrees. “It’s all well and good that we have a developed world getting vaccinated, but that’s only a quarter of the total global population.
“If you end up with a mutation that is immune to the vaccinations, you can imagine a world where we are back to square one.”
Indeed, at the G7 summit in the UK in June, the World Health Organisation warned that, to truly end the pandemic, the goal must be to vaccinate at least 70 per cent of the world’s population over the next year.
“In response, the G7 planned to contribute one billion doses. While that is admirable, it’s only 10 per cent of what’s required. So, there is a long way to go,” says Kolding