By Arielle Salvary
In order for the human body to recover when it becomes injured it needs to repair the broken blood vessels and grow new tissue, and red blood cells are integral in providing a foundation for this healing process. So, what does this have to with economics? An economic recovery is often regarded as a similar process to the healing of the human body, but this is especially ironic within the context of a global pandemic that has the entire world bruised and battered. Across the globe, countries both big and small, developed and developing were catapulted into economic freefall by a pandemic that no one saw coming. With the discovery of several vaccines at the end of 2020, many believe that a partial economic recovery will be seen by the end of 2021. But like the healing process of the body there needs to be several factors working together for the healing process to be a success. The two main factors in the case of the economic recovery are the rollout of the vaccines and effective economic policy management.
Following an injury to the human body, red blood cells as aforementioned help to build new tissue which acts as a scaffolding that helps to elevate and support the rest of the healing process. The vaccines are the red blood cells of this global pandemic. The global economy is expected to expand 4% in 2021 (IMF, 2021), however this is heavily if not entirely dependent on widespread vaccine deployment. It is the base that is needed for economic policy to shift from income support to growth-enhancing. However, while there has been the discovery of several vaccines this does not mean that the economic outlook for the rest of the year is definitively positive. According to the IMF Chief Economist Gita Gopinath, “Much depends on the outcome of this race between a mutating virus and vaccines and the ability of policies to provide effective support until the pandemic ends.” (Wiseman, 2021)
For developing countries such as those in the Caribbean there is an added burden of acquiring the vaccine. While advanced economies such as the United States, the UK and others have had preferential access to securing vaccines for their populations it has been much more difficult for developing countries. It has been widely advocated that strong multilateral cooperation is necessary in order for a successful global dissemination. Especially through increased funding to the COVAX facility which will allow all countries to have access. However, thus far this process is still extremely inequitable as many developed countries have already started to vaccinate their populations in large numbers while some developing countries have received as much as a few thousand vaccines if any at all. As referenced in an article written by Elizabeth Morgan, if Jamaica was to depend on the COVAX facility alone, only 16% of their population would be vaccinated by the end of 2021 (Morgan, 2021). Furthermore, inequality is another driving force that has the potential to hamper many countries’ hope to begin the process of returning to pre-pandemic levels of economic activity.
Nevertheless, the vaccine alone cannot be expected to heal the entire global economy, rather as mentioned earlier, it is merely just the foundation. The rollout of the vaccine must be accompanied by economic policy that stimulates equitable and sustainable economic growth. This is especially important for the Caribbean region who has been one of the hardest hit economically by the pandemic. Although there have been projections that the region will have a positive growth rate this year, according to ECLAC. It will not be sufficient to return to pre-pandemic levels of economic activity (ECLAC, 2020). The pandemic has caused severe negative socio-economic costs to the region through increased unemployment, poverty and inequality which has in turn made worse the structural deficiencies in the region. This burden has been even more significant on women, youth, the poor, those employed in the informal economy as well as those who work in sectors that heavily involve human contact.
Economists advocate that in order to resolve this fallout, policymakers should at the appropriate time begin to shift to growth enhancing active macroeconomic policy. Public spending must be shifted towards economic transformation and strengthening public investment in sectors that would create employment. This would in turn encourage higher levels of private investment, income and consumption. However, this shift in economic policy cannot take place without the deployment of a vaccine which would allow economic activity to increase considerably. Therefore, for those countries who have already had difficulty in getting access to the vaccine, the timeline to economic recovery seems further away.
When the human body needs to heal your cells and your tissues work together to facilitate the healing process. For the global economy to recover from the coronavirus pandemic, there needs to be worldwide equal access to the various vaccines and each country needs to implement sound economic policy. If your body was unable to produce red blood cells then you would not be able to heal, if there is no equitable distribution of the vaccines for COVID-19, an economic recovery would not be possible. It is not possible to have one without the other. While many hope that by the end of 2021 economic activity will have returned to pre-pandemic levels, the lack of access to the vaccine for some countries leaves much to be desired.
World Bank. 2021. Global Economy to Expand by 4% in 2021; Vaccine Deployment and Investment Key to Sustaining the Recovery. [online] Available at: <https://www.worldbank.org/en/news/press-release/2021/01/05/global-economy-to-expand-by-4-percent-in-2021-vaccine-deployment-and-investment-key-to-sustaining-the-recovery> [Accessed 16 March 2021].
WIseman, P., 2021. IMF: Vaccines will power 5.5% global economic growth in 2021. [online] ABC News. Available at: <https://abcnews.go.com/Business/wireStory/imf-vaccines-power-55-global-economic-growth-2021-75486991> [Accessed 16 March 2021].
Morgan, E., 2021. CARICOM: An Uncertain Trade and Economic Outlook for 2021. [online] CARICOM Today. Available at: <https://today.caricom.org/2021/01/20/caricom-an-uncertain-trade-and-economic-outlook-for-2021/> [Accessed 16 March 2021].
IMF. 2021. World Economic Outlook Update, January 2021: Policy Support and Vaccines Expected to Lift Activity. [online] Available at: <https://www.imf.org/en/Publications/WEO/Issues/2021/01/26/2021-world-economic-outlook-update> [Accessed 16 March 2021].