Pandemic Snapshot

Analysis

By Dylan Barry, GCPPP staff, December 4th 2021

It is now almost exactly two years since the first cases of the novel coronavirus began to spread in and around the city of Wuhan in Hubei province, China, in late 2019; December 8^th will mark one year since the first Covid-19 vaccination took place in the United Kingdom, closely followed in Israel and the United States; and it is little more than one week since the latest “variant of concern”, now dubbed Omicron, was discovered and rocked confidence in how far even well-vaccinated countries are from safety.  So this ANALYSIS seeks to take stock of whence we’ve come and where we’ve got to, so as also to evaluate the developing trends that are most likely to define the pandemic in the new year.

The death toll

The official numbers published by governments suggest that there have been close to 265 million confirmed coronavirus cases and 5.2 million coronavirus deaths worldwide since the onset of the pandemic. Because of imperfect testing coverage and the frequency of mild and asymptomatic cases of COVID-19, both figures are thought to be significant underestimates.

Perhaps the best way to understand the true impact of the pandemic is via publicly available data on excess mortality. Using such data, The Economist estimates that the pandemic has killed approximately 17.5 million people since January 2020—3.5 times higher than the official figure and roughly 0.2% of global population. The countries which have seen the largest loss of life in absolute terms are the United States, India, Indonesia, Brazil, Mexico and Russia. Relative to population, it is Eastern Europe (especially Russia) and Latin America that have suffered most.

In most regions, cases of infection have declined steadily since the end of the last global wave in July and August. The (very large) exception is Europe, where daily case numbers have surged since late September to the highest level seen during the pandemic. The result has been a rise in coronavirus hospitalisations and deaths, which thanks to vaccinations has been a lot less dramatic than the surge in infections. Over the last three weeks, Europe has nonetheless accounted for well over half of global coronavirus deaths. Fortunately, North America appears to be avoiding an equivalent winter surge and case numbers are close to a pandemic low in the Southern Hemisphere, despite Omicron.

Beyond the death toll, the most enduring legacy of the pandemic promises to be “long COVID”, a phenomenon that is still mysterious but is becoming better understood. The syndrome is distinguished by persistent symptoms including fatigue, shortness of breath and cognitive dysfunction months after an initial infection with the coronavirus. The syndrome is likely to consist of a constellation of different effects, including overlap with Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS) which is also associated with severe viral and bacterial infections. It remains unknown how many people are affected by this syndrome, and how badly. On October 31st, it was estimated that 1.2 million people were living with long COVID in the United Kingdom—1.9% of the British population—of whom 36% report initial infection with the virus more than a year ago. A second effect, also impossible currently to quantify, has been the effect on mental health of COVID and of associated restrictions.

The vaccination race

Of the global population, 54.8% have received at least one dose of a coronavirus vaccine and 44.0% are now deemed fully vaccinated against the coronavirus. That sounds an impressive figure – and is, when compared with historic experience of vaccine development and distribution – but it remains well below the levels of 80-90% that scientists believe necessary to restrict the spread of the virus decisively; and the overall figure conceals a wide disparity between countries and indeed continents.

The early leaders in vaccinations – the UK, United States and Israel – had each fully vaccinated roughly half their populations by the end of June. But those countries have since struggled to maintain that pace as vaccine hesitancy and complacency emerged, and have rapidly fallen down the list of most-vaccinated countries. The vaccine race is currently being led by other wealthy countries in Europe and Asia. In the former, Portugal has now fully vaccinated 87.8% of its residents, followed by Iceland (82.0%), Spain (80.5%), Denmark (76.6%) and Italy (73.1%). In the latter, Singapore has fully vaccinated a remarkable 91.9% of its residents, followed by South Korea (80.3%), Japan (77.4%) and China (74.5%). South America too has done very well. Chile has now fully vaccinated 83.9% of its residents, followed by Cuba (81.6%), Uruguay (76.3%) and Argentina (65.8%).

Of the residents of high-income countries, more than two-thirds (68.0%) are now fully vaccinated, with upper middle-income countries (66.6%) not far behind. The corresponding figure for low-income countries, however, is only 3.1%. The biggest laggard is the continent of Africa. Of the forty least-vaccinated countries in the world, thirty-five are African nations and only 7.5% of Africans are now fully vaccinated against COVID-19. Within Africa, too, there is a wide disparity, with 25% fully vaccinated in South Africa and just 0.01% in Burundi.

Vaccine supply and distribution

The high rates of vaccination in high and upper middle-income countries have been made possible by the rapid (if unpredictable) expansion of global vaccine production. By the start of October, the world’s pharmaceutical companies were producing more than 1.4 billion vaccine doses per month—up 21.2% since July. In November that dropped to just below a billion doses per month due to a dramatic fall in Chinese production, but the world is still on track to reach over 11 billion vaccine doses by the end of the year—no mean feat.

There are many reasons for the disparity in vaccine distribution and deployment, including vaccine hesitancy, the impacts of disinformation and, in some countries, competing disease-prevention priorities. But one big overall reason is a combination of vaccine hoarding by high-income and upper middle-income countries, and broken promises. In grand gestures at the G7 and elsewhere, countries have pledged to donate over 1.4 billion coronavirus vaccine doses to the COVAX facility—the international body designed to guarantee vaccine supply to low-income and lower middle-income nations—during 2021 and 2022.

Yet as of November 8th (the most recent available data), only 190.2 million of those vaccine doses had actually been delivered—a mere 13.1% of the total. Rather than prioritising vaccinating populations in the developing world, many countries have chosen to vaccinate children and adolescents in their own countries instead, and are now expanding booster shot programmes as concern rises, only partly justified by the science, about waning immunity from vaccinations. Some countries have simply let excess vaccine doses expire.

Nevertheless, COVAX vaccine deliveries to low-income and lower middle-income countries have started to pick up in the last two months. Roughly 50 million doses arrived in Africa in October, for example—almost twice the September number —and the trend is expected to improve into the new year. That is encouraging, but greater vaccine supply raises its own challenges. In particular, countries like Kenya, Rwanda and South Africa are already facing shortages of syringes due to export restrictions, rising freight costs and general global supply-chain malaise. As a consequence, the Bill and Melinda Gates Foundation has stepped in to grant US$3.9 million to a Kenyan syringe manufacturer to expand manufacturing volume.

Beyond donations, general vaccine exports have averaged close to 500 million doses per month since the end of June. Nevertheless, the vast majority of vaccine doses produced have been administered domestically, with India and China, two of the largest producers, having also been massive consumers. The largest exporter of vaccines in the world has nevertheless been China, followed by the European Union and the United States. Together those countries account for more than two-thirds of all vaccine exports worldwide.

The global economy

The recovery from the slump of 2020 continues to be strong, albeit with significant hiccups. The OECD expects the world economy to grow 5.6% in 2021, before moderating to 4.5% in 2022 and 3.2% in 2023. That 2023 rate would be at the low end of historic trends in recent decades but would nevertheless imply that the world as a whole was converging with its pre-pandemic growth path.

As the OECD’s chart shows, the United States has grown strongly, with GDP already surpassing its pre-pandemic level in the second quarter. By contrast, jobs-growth has been bumpier, with employment still well below pre-pandemic levels. The opposite is true in Europe, where employment is already close to its pre-pandemic level but output has recovered more slowly. The Chinese economy bounced back remarkably quickly in the first half of the year. But it has since stuttered after a series of defaults by major property developers sent jitters through financial markets and undermined confidence in a housing sector that accounts for 70% of Chinese household wealth and continues to be a major engine of growth. Temporary power cuts in a large number of provinces are also expected to weigh on manufacturing investment.

Beyond those heavyweights, global economic progress is a two-speed affair. In the advanced economies (and China), the IMF expects output to have returned to its pre-pandemic growth path by the end of the year and to slightly exceed it thereafter. For the rest of the world, however, output is expected to stay below its pre-pandemic trend until at least 2025. This divergence is fuelled by two factors. The first is vaccine disparity. The second is public finances. While the advanced economies were able to maintain generous fiscal support through much of 2021, poorer countries had to turn off the tap earlier, if they had been able to open it at all.

The global recovery is also being characterised by supply bottlenecks and persistent inflation. A semiconductor shortage will continue into 2022, choking the manufacture of electronic products—especially new motor vehicles. The global supply of oil and natural gas remains constrained, with demand pressure likely to rise as the Northern Hemisphere winter unfolds. The global shipping shortage is expected to continue for some time, although the worst appears to be over. And, finally, labour shortages—especially in the United States—are weighing on many industries.

On their own, these supply constraints would be expected to lead to higher consumer prices. But these effects are being further exacerbated in Europe and North America (but not Asia) by high consumer demand for products. This is because households still have accumulated savings to spend and money has been diverted away from services like tourism, restaurants and entertainment. As a consequence, inflation remains concerningly high, as the chart shows. Unfortunately, the OECD predicts that inflation in North America and Europe may get worse before it gets better.

The Federal Reserve, European Central Bank and other monetary authorities continue to maintain that the rise in prices will be temporary and should start to ease as global supply chains unknot themselves. Nevertheless, monetary authorities face increasing pressure to act against the prospect that inflation could persist. After the last Federal Open Market Committee (FOMC) meeting on November 3rd, Federal Reserve Chair Jerome Powell announced that the monetary authority would begin tapering its asset purchasing program at a pace consistent with ending purchases by mid-2022.

It will still be some time before interest rates are raised, however. Despite a more hawkish tone struck by Chairman Powell in recent comments to Congress, a rate rise in the first two quarters of 2022 remains unlikely. The investment bank JP Morgan, for example, anticipates that the Federal Reserve will make its first rate rise in September 2022.

The Omicron variant

There is, of course, a virus in the room. While the trends and forecasts outlined above held true a little more than a week ago, the emergence of the new Omicron variant of the coronavirus has made the future even more uncertain.

The Omicron variant (B.1.1.529), first sequenced in Southern Africa (although its origins remain unclear), is a highly-mutated strain of the coronavirus distinguished by 32 mutations on the spike protein that dots its surface and allows the virus to enter and infect cells. Those mutations include several known to increase the transmissibility of the virus and allow it to better evade immunity, but had yet to emerge together in a single strain.

The Omicron variant has now been picked up in 24 countries, but its epicentre is the South African province of Gauteng, home to the city of Johannesburg. The early evidence suggests the new variant is highly infectious, with cases in Gauteng rising much faster than in the face of any previous variant—including the Beta and Delta ones. That is concerning because Gauteng also has the highest levels of natural immunity in the country. The province was hit especially hard by the Delta variant, with serological testing suggesting that 60-80% of residents have been previously infected with the coronavirus.

That statistic, as well as anecdotal evidence of breakthrough infections in South African hospitals, suggest that Omicron is successfully evading existing antibody immunity. Whether that will impact the protection offered by vaccination against severe disease and death remains unclear. Fortunately, early anecdotal evidence suggests that most Omicron cases are mild or asymptomatic—but that may simply be an artefact of South Africa’s relatively young population. It is worth emphasising, however, that the available data remains too limited to develop a strong picture of the variant’s behaviour. That will change in the coming weeks.

While much is still uncertain, it is reasonable to venture a few predictions about how Omicron will change the direction of the pandemic in the coming months. If the new variant does prove to be more transmissible than the Delta variant and is able to evade existing antibody immunity, Omicron is likely to result in staggered waves of infection over the next 2-4 months as it displaces Delta as the dominant global strain. That will result in more cases and more deaths—although how many more deaths will depend on whether the existing coronavirus vaccines continue to offer protection against severe disease.

The new wave is likely to drive up vaccination rates temporarily as concern over the variant drives people who are weakly vaccine-hesitant to commit to getting jabbed. That is already happening in South Africa, where vaccination rates have spiked in the last week. On the other hand, many high- and middle-income countries are intensifying efforts to administer booster jabs to their populations to calm Omicron fears and, they hope, prevent new lockdowns. That will re-direct some global vaccine supply away from low-income countries in the next couple of months.

In the meantime, however, the economic consequences of a spreading Omicron variant may be heavy. The tightening of limits on travel and the likelihood of lockdowns, curfews and other restrictions on economic activity will weigh on growth. That might normally be expected to help reduce inflation—but in this case it may do the opposite by reinforcing the diversion of demand into goods and away from restricted services and, if bans on people movement become even more widespread, may add new knots to supply chains.

Much still to ponder

Of course, the Omicron variant may yet prove to be a storm in a tea cup—it is simply too soon to tell. Like other coronavirus variants before it, Omicron may rapidly become dominant in one region but struggle to gain a foothold in others. That is what happened with the Alpha, Beta, Gamma and Mu variants. The Delta variant is the only truly globally dominant strain to emerge and it is not yet clear whether Omicron will be able to replace it.

Either way, the world is better placed to deal with a concerning new variant than it has been at any other point in the pandemic. The new variant is cause for concern—but, as public authorities ratcheting up control meaures proclaim, it is not cause for panic. It is, nonetheless, a reminder that this pandemic has not gone away and will not go away any time soon, putting a premium on preparation, adaptation and long-term planning to mitigate the effects of any further variants that may emerge, especially as the road to full global vaccination remains so long.