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Uneven vaccine roll-outs will widen recovery gaps

Oxford Anaytica

Budgetary, logistical and political constraints will shape what economic recovery path individual countries can adopt

Economic starting points, COVID-19 cases and vaccination rates vary widely; recovery rates will differ just as much

Source: Official data from national authorities; Coronavirus Government Response Tracker, Oxford University

Outlook

National-level variation in economic performance will increase in 2021 compared with last year. The parameters of the policy challenge each country faces depend on its economic structure; its scope to sustain and expand stimulus; and its ability to control infection through non-pharmaceutical interventions such as lockdowns and social distancing.

Vaccination roll-outs will exacerbate recovery challenges, not least due to lingering questions about the protection offered and the impact on transmission. The recovery of high-employment sectors -- travel, hospitality, entertainment and retail -- will be especially sensitive to the success, and failures, of immunisation programmes.

Impacts

  • Border closures and unequal vaccine roll-outs will dampen 2021 global growth; highly indebted and tourism-reliant states will suffer most.
  • Developed states and China will have to time stimuli removal carefully; investors will watch US Fed guidance as US inflation is rising.
  • The asymmetry of policy scope between developed and developing nations will widen as a dollar rebound pushes more states into debt distress

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