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With developing nations struggling to obtain vaccines, the WHO has warned that the failure of wealthy nations to lend a helping hand will affect the economy of the entire world. We speak to Dr Lim Chee Han for some insights.
https://www.bfm.my/podcast/evening-edition/evening-edition/vaccine-inequity-will-affect-wealthy-countries-too
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1. From an economic standpoint, why is it important that all countries in the world get vaccinated?
CH: In order for the global economy to function at full capacity, it has to take care of the dimensions of global demand and supply of goods and services.
For production of goods and provision of services, the economic output in many parts of the world still requires labour and capital inputs. Before talking about the total productivity factor, one should pay more concern about the health of labour, our workers.
In a world without vaccine as we know by the end of last year 2020, when the pandemic was ravaging and lost control, borders were closed (and are still closed), many areas were under lockdown, many workers were forced to stay home due to quarantine order or at hospital or quarantine centres due to COVID-19. There were also people went unemployed due to pandemic-induced economic downturn. So, from the economic point of view, it is bad, because the labour force is not utilized at full capacity, productivity suffers. Economic inefficiency is obvious and wasteful.
Also, the prevalent lockdown policy also would suppress the public demand for more goods and services, this in turn sends a negative feedback loop to the local and global economy. In such gloomy economic climate, investment for certain sectors would go slow or significantly reduced, thus capital inputs would also be affected.
Vaccine is the game changer that most people on this planet eagerly look forward to receive, in the understanding that it will effectively and significantly prevent the spread of viral infection, once the herd immunity could be achieved. This is still a good presumption currently, no one knows if the current crop of vaccines would all produce the efficacy of giving us a long term protection.
Since the global economy is very dynamic, more than ever the businesses would want the borders to be reopened for free movement of people and goods, if many parts of the world are still not vaccinated, it would be unlikely that the world can go ‘business-as-usual’, even the vaccinated persons have to be extra cautious, because the vaccine protective effect is not 100%.
2. This is in a larger sense a picture of how interconnected our global economy is. Could you break down for us how it impacts wealthier nations if developing countries don’t have the same access to the vaccines?
CH: As I have described just now, if the developing countries are still bogged down by the pandemic at uncontrollable rate, majority of the populations would be either sick or quarantined, economy got badly hit, people go unemployed, why do we expect the people in this part of the world still go on buying goods as usual from the developed countries? Surely the global aggregate demands for certain goods would be affected, because developing world is actually more populated than the advanced countries.
What about the outputs of raw materials, intermediate goods and products badly required by the developed countries, if few people are able to work on those? Thus the production lines and value chain in the developed countries would also face disruptions. Even if they don’t, they might have risk due to uncertainties about the pandemic situation in particular countries.
3. It is estimated that a delay in getting the pandemic under control could lower our global economic output by USD4.4trillion. What does this translate to in practical terms across the world?
CH: USD4.4trillion is simply an astronomical number, ordinary folks probably can’t get their heads around it. But if we put it in percentage, it means 5.7% drops of annual global output, compared to the level before the pandemic. Mind you, this is not the worst case scenario projection (USD9.2 trillion). In short, this means further global economic recession.
We also have discussed just now about how interconnected and dynamic is the global economy. Yes, a significant reduction of the global output is the big picture, but we need to scrutinize the effects down to the level of local economic sectors and how this phenomenon could snowball into massive socioeconomic problems in particular locality where the main economic activities are severely affected. We should understand that the pandemic effect hits some sectors at different magnitude and impacts.
4. How much of a priority is timing? In the sense that, does everyone have to be vaccinated at more or less the same time?
CH:When it comes to fighting pandemic, timing is at a premium. The goal is to achieve herd immunity as soon as possible, many countries give a timeline of 1 to 2 years, if they are fortunate enough to get hold of the vaccine orders.
Our Malaysian government gives a timeline of 1 and a half year is sensible though the challenges are huge. Given that we have about 33 million of population, it is practically impossible to vaccinate everyone at ‘more or less the same time’. In my understanding, the government had already set out a plan to vaccinate the population in 3 stages, first priority is given to the most vulnerable and risky populations such as frontliners, elderly and patients with co-morbidity, then come down the priority according to risk level.
That is only the vaccine delivery challenge. We need to talk more about the global challenge of vaccine production, procurement and logistics, too.
5. We see wealthy countries having much better access to the vaccines, and in a sense, leading to some amount of hoarding. Is there a way to get them to share?
CH: According to Duke University’s Global Health Institute, a small group of rich countries — comprising just 16 percent of the world’s population — have locked up 60 percent of the global vaccine supply.
Few days ago, the news reported that 39 million doses of vaccines have been administered in 49 wealthier nations, while Guinea is the sole low-income country on the Africa continent to receive doses, with only 25 people being inoculated so far. This shows the global vaccine inequality and shameful disparity.
Although the COVAX facility led by GAVI, CEPI and WHO, promise to deliver 2 billion doses for the 20% population from the 92 low income countries by the end of this year, only 5 vaccine producers showed commitment so far, one of them is Pfizer, they agreed to provide only up to 40 million doses, far short of the target.
Personally, there should be interventions from the world leaders and authority such as UN and WHO, to ensure the vaccines, as well as other medical products and equipments being shared equitably and efficiently. The time is now.
6. If we could look at some sectors in the economy, which are likely to be more affected without a vaccine?
It goes without saying, tourism-related sector is dying. Also, events-oriented economic activities especially those which involve mass gathering of people, for example, exhibition, concert, football game, even cinema, under SOP they would be only at best operating at sub-par of maximum capacity.
6a) And briefly addressing tourism - will we be able to travel again, if let’s say half the world isn’t yet vaccinated?
CH: Have you heard about a thing called ‘green bubble’ travel zone? That’s when both sides of countries got the pandemic under control within their own borders, then the bilateral cross-border movement could be made possible. Vaccination would likely help to achieve the desired effect of controlling the disease transmission, but even without that, some countries such as Taiwan and Vietnam can show that they could handle the pandemic very well.
Yes, we will be able to travel again one day on the aforementioned conditions, but perhaps we still have to observe the SOP wherever we go. The world is still not safe until all is safe.
7. Does the Covid-19 pandemic point to a place where globally we do need to have our health systems more in sync?
CH: The design of health systems could vary from country to country, and would likely to stay so, due to historical path-dependence factors for respective countries. It is very complicated to ask the health systems to ‘sync’. The set up is probably very much embedded into the social and culture of a particular country, take an example, NHS in the UK.
So, I would say rather say, information and knowledge sharing, resources sharing and more cooperation would be more tangible for many countries to come together, especially when facing global pandemic health threat.
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