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Tale of two pandemics could leave a dangerously uneven playing field

Experts have warned that failing to share Covid vaccines with poorer nations will ultimately harm all countries as it allows dangerous variants to generate and spread. From an economic perspective, it also kills off trade with vital partners.

These warnings are coming to pass.

Successful vaccine rollouts in the UK, US and Israel have brought Covid under control in those countries, promising a return to relative normality. But confusion, politics and supply issues around jabs have let the pandemic run out of control in other countries such as India and Brazil.

There are already signs this loop is closing, with growing numbers of cases in the UK tied to the ‘Indian variant’ raising questions about the next step out of restrictions imposed there late last year.

Getting with the program in Europe

Continental Europe is particularly vulnerable to this kind of scenario, having missed its chance to be in the forefront of the vaccination wave.

Over the last few months, Europe has resembled a tower of Babel, in which mixed messages about jab effectiveness – often delivered in fits of political pique -- have hampered take-up. The result has been elevated case numbers in countries such as Germany, France, Italy and Turkey.

The good news is that vaccination programs in Europe finally appear to have turned the corner.

EU countries have since lifted bureaucratic and logistical hurdles that jammed earlier vaccination efforts. This has accelerated jab rates rapidly and boosted hopes that economies will reopen ahead of Europe’s crucial summer tourist season.

Investors have noticed. In late April, combined flows of new money to EPFR-tracked Europe equity and bond funds hit their highest total since last June.

Time to share the wealth?

As of mid-May, only 18% of the world’s population had been vaccinated, most of them in Europe and North America. The global community faces a huge challenge to help struggling nations catch up on vaccines and avoid a dangerous North-South divide.

So far, 49 million vaccines have been shared through Covid-19 Vaccines Global Access (Covax), a tiny amount compared to what is needed and relative to its own target of 2 billion by the end of the year.

Furthermore, the focus of developed nations is quick to slip. Flows to Israel Equity Funds soared when that country took the lead in the global vaccination sweepstakes. But investors soon took that for granted, and flows ebbed as they turned their attention back to Israel’s dysfunctional politics and geopolitical risks.

This summer could see Europeans sunning themselves in the Mediterranean while people are still dying in the streets in India. If that happens, the bills for both emerging and developed countries in terms of lost trade, new variants and the environmental costs of increased poverty will come due for years, if not decades.

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