The pace of the vaccination program is a key indicator as it will shape the reopening timelines across Asian economies. To get a sense of the extent of vaccine uptake needed to assure policymakers to lift pandemic-related restrictions, it can be helpful to look at other economies that are ahead in the vaccination curve.
The experience of the US and UK suggests a threshold in the 40-50 per cent range. In the US (around 45 per cent of the population has been fully vaccinated and roughly 53 per cent has received at least one dose of vaccine at the nationwide level), most states have lifted the bulk of their COVID-19 restrictions.
The UK government initially planned to fully reopen the economy on 21 June but subsequently decided to postpone the date to 19 July, when it expects two-thirds of the adult population to be fully vaccinated, or equivalent to roughly half of the total population.
It is now well-recognised that sufficient vaccination coverage is required for the world to arrive at a less disruptive ‘new normal’, by paving the way to an easing in movement curbs and restoring public confidence. The risk of fresh outbreaks will also fade, and the accompanied reduction in financial uncertainty should bode well for a recovery in business investment and household consumption. Exports have led the recovery in Asia so far and for domestic demand to catch up wider vaccine coverage is crucial.
With the pace of vaccination varying widely among Asian economies, their reopening is expected to be staggered. As things stand, there are still significant uncertainties on the timeline. The emergence of more transmissible variants can significantly push up the vaccination rate needed to achieve herd resilience. Vaccine efficacy against virus mutations may also be a watch point.
Still, it is encouraging that vaccine rollouts are speeding up across the board, and economies that cumulatively make up almost 80 per cent of the region’s gross domestic product (or roughly half for Asia excluding China) are on track to achieve high vaccination rates and (almost) fully reopen their domestic economies within the year. Another potential upside is an increased in donations of surplus vaccines from advanced economies which will in turn help speedup vaccination progress worldwide, including in Asia.
Overall, there are reasons to be cautiously optimistic we may finally be seeing the beginning of the end of the COVID-19 drag on the region’s growth.
Krystal Tan is Economist at ANZ