Vaccine literature, a Post-it note and a pen sit on a chair at the vaccination clinic inside Seymour-Hannah Sports and Entertainment Centre in St. Catharines, Ont., in March. People were encouraged to write a message about what receiving the vaccine meant to them and add it to the mosaic on the arena glass.Tara Walton/The Globe and Mail
The best move that Canada and many other advanced economies made in fighting the COVID-19 recession was getting vaccines into as many arms as possible as quickly as possible. That could be their best move to tackle their current inflation worries, too.
But now, the aggressive policy push needs to be directed at arms outside those countries’ borders. Sadly, despite some big promises, that hasn’t been happening with nearly enough urgency.
There’s little doubt that the continuing pandemic – complicated by the Delta variant of the coronavirus – has played a major role in the supply chain disruptions that have fuelled the most nagging and troubling elements of this year’s inflation rise. Key exporters of raw materials and manufactured parts, particularly among emerging and developing countries, have been bogged down by continued or renewed restrictions.
It’s no coincidence that in many of these countries, vaccination rates are relatively low. Global investment management firm Schroders noted in a recent report that emerging markets account for half of the world’s exports, yet their vaccination rate, as of the end of September, was only about half that of advanced economies. Many countries that haven’t yet been able to ramp up their vaccination rates have instead leaned on “zero COVID” strategies, which have included tight border controls and strict short-term lockdowns to quell outbreaks.
That’s at the crux of the inflation problem, Schroders argued.
“With large sections of the world yet to be vaccinated, the Delta variant has led to some countries imposing lockdown restrictions or constraints on mobility. This has caused bottlenecks to global supply chains and shortages. Not having enough workers is often blamed for factory closures or delays in transportation of goods,” the report said.
The advanced countries hold the keys to addressing this problem: They have the vaccine supplies, either in hand or on firm order. But they’ve been appallingly slow to share them with the export-heavy developing countries that need them.
Five months ago, the G7 countries pledged to donate 870 million vaccine doses to COVAX, the World Health Organization’s international COVID-19 vaccine-sharing organization. The International Monetary Fund recently reported that as of mid-September, only 19 per cent of those doses had actually been delivered.
Canada is a particularly egregious foot-dragger. So far, our country has delivered only about four million of the 50 million doses it has pledged to the program.
“Donations should be accelerated to rapidly fulfill the commitments,” the IMF urged in its recent World Economic Outlook. “At least one billion doses could be shared by the end of 2021 without jeopardizing national vaccination targets.”
Beyond the obvious global health benefits, a rapid acceleration of vaccine deliveries among crucial exporting countries could change the equation for global supply chains. For example, Singapore, one of the world’s most important trade and transportation hubs, has begun to ease its previously ultra-strict zero-COVID strategy, in light of its vaccination rate reaching 80 per cent. Other countries in the region are looking at easing their own zero-COVID restrictions, but their relatively low vaccination rates in the face of the Delta variant have made that difficult.
The economic case is strong for Canada and its advanced-economy peers to help clear those supply roadblocks by shifting their vaccine donations into a much higher gear. The payoff – in terms of easing shipping delays and goods shortages, removing obstacles to trade and commerce, and, crucially, reducing inflation pressures – would more than outweigh the relatively modest costs.
If you include funding that the federal government has pledged to COVAX to buy and produce additional vaccines, Canada has promised to donate 200 million doses by the end of 2022. By Ottawa’s own calculation, its total financial commitment to help deliver COVID-19 vaccines, therapeutics and diagnostics to the rest of the world is about $1.3-billion.
That’s equivalent to about a half-week’s worth of payments under the government’s Canada Emergency Response Benefit last year. The investment is a drop in the bucket in the fight against this pandemic and its deep economic impact. Clearly, Ottawa could afford to spend more to accelerate the timetable of its own vaccine donations, and to help procure and produce supplies faster for the countries in need.
Regardless, one of the biggest issues COVAX has faced in procuring vaccines this year has had little to do with cost or financial support. Many of the world’s richest countries have locked up delivery commitments from manufacturers; the supplies are already spoken for. Canada, for example, already has in hand more than enough doses to vaccinate the remainder of its unvaccinated population over the age of 12.
While Canada has paused taking deliveries of new supplies, it would help if other vaccine-rich countries would commit to doing the same, giving the rest of the world a fighting chance to catch up.
“What surplus nations can do is, basically, step out of the queue,” IMF chief economist Gita Gopinath said in a recent interview with The Globe and Mail. “It will cost them nothing.”
Nothing is a pretty good price to pay to help ease a heavy foot off the global inflation accelerator.
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