Impact of vaccine inequity on economic recovery
High-income countries have borne the brunt of COVID-19 cases and related deaths. But analysis of the latest projections of global economic growth show greater negative economic impacts in low-income and lower-middle-income countries (World Economic Outlook, April 2021; IMF).
There are significant differences in the IMF’s economic forecasts before the development of the vaccines (April 2020), during vaccine development (October 2020), after commencement of vaccine roll-out (April 2021) and finally after vaccination rates exceeded the 40 percent target in many high-income countries (October 2021). The forecasts in October 2020 painted a bleaker picture compared to April 2020 due to a more complete understanding of the economic fall-out of the pandemic. At the same time, promising vaccine candidates in the development pipeline resulted in moderate to strong projections of economic recovery for 2021 for all four country groups. However, by April 2021, it was clear that economic recovery would not be uniform across country groups, most likely driven by concerns around inequitable access to vaccines which is confirmed also in the latest IMF WEO Outlook from October 2021. Driven by increased vaccination rates, high-income and upper-middle-income countries are projected to make stronger than expected recoveries. But forecasts for lower-middle-income and low-income countries are not encouraging as there was a significant downward revision of economic growth in both groups of countries (compared to estimates from October 2020). Both groups of countries are projected to stay on a downward economic growth trend.
To further understand the impact of COVID-19 vaccination rates on economic recovery, UNDP analyzed how vaccination rates by the end of September 2021 in 195 countries impacted GDP forecasts. The analysis compares vaccination rates in April and October with the difference in the GDP growth rates for those months, based on IMF’s World Economic Outlook estimates.
UNDP’s analysis suggests that the economic recovery will be faster in countries with higher vaccination rates. At the end of September 2021, 30 people out of every 100 around the world had been fully vaccinated. The modelling exercise suggest that if one additional person out of every 100 had been vaccinated, global GDP would have reached US$94,709 billion at the end of 2021 which represents an increase of US$93.56 billion in comparison to IMF’s projections. This increase is equivalent to 0.10 percent of projected global GDP for 2021.
In low-income countries where vaccination rates are lagging, the path to recovery will be long and uncertain unless urgent action is taken now by the global community. By September 2021, only 2.33 percent of people in low-income countries had been fully vaccinated. UNDP’s analysis suggests that, had the vaccination rate been equal to that of high-income countries (54.3 percent), low-income countries’ GDP would have increased by $16.27 billion which represents an increase by 5.16 percentage points in 2021, which could have been used toward other development priorities.
For instance, if 40 percent of the population had been vaccinated in the Democratic Republic of the Congo by September 2021, the country’s expected increase in GDP could have covered 75 percent of its current health expenditure. And the same level of vaccination in Ethiopia could have covered all interest payments on government debt times three.