Covid’s Impact: Likely Trends in 2022
Arvind Gupta, Director, VIF

About 5.8 million people reportedly died globally due to covid[1]. The unreported number is much higher. The world struggled to come out with a comprehensive, coordinated, effective response to the Covid pandemic crisis. The invention of vaccines was a major achievement. The vaccines have helped to mitigate the pandemic's impact but there is considerable uncertainty about their efficacy against potential new variants of the virus. More infectious strains of the virus, like the Omicron, have raised the spectre of fresh waves of the pandemic although some experts say that the supposedly less virulent Omicron variant will replace the delta variant and its emergence marks the last stage of covid as herd immunity develops.

The debate over booster doses has not been settled though the opinion in favour of boosters is growing. We may see new public health and medicinal approaches to deal with the pandemic in 2022. The search for a new generation of vaccines and treatments will continue in the new year.

Vaccine inequity is a major cause of concern. Nearly 9 billion Covid vaccine doses have been given in 184 countries by year-end.[2]But a large portion of the global population has yet to be vaccinated. Whether the world will reach full vaccination status in 2022 is highly doubtful. Vaccine inequity could lead to the appearance of new variants. High-income countries have hoarded the vaccines. Pandemic fatigue is driving people to take up more risks than warranted. This might prolong the pandemic in 2022 and beyond.

Economic Recovery

The IMF estimates that the pandemic will cost the global economy US$28 trillion between 2020 and 2025.[3] The world is slowly coming out of the economic downturn caused by the virus but the economic recovery is still uneven, two-track and losing momentum. The pre-pandemic level of economic growth has yet to be reached.

Economic uncertainties caused by the virus are likely to persist in 2022 and beyond. According to the IMF, the “aggregate output for advanced economies would regain its pre-pandemic trend path in 2022 and exceed it by 0.9 percent in 2024. By contrast, output for emerging market and developing economies, excluding China, is expected to remain 5.5 percent below the pre-pandemic forecast in 2024.”[4] The IMF’s message is unambiguous: “Ending the pandemic is a necessary prerequisite to restoring jobs, livelihoods, and economic well-being. One cannot be achieved without the other.” [5]

The pandemic has resulted in massive job losses across the world. The ILO estimated that “In the third quarter of 2021, total hours worked in high-income countries were 3.6 per cent lower than the fourth quarter of 2019. By contrast, the gap in low-income countries stood at 5.7 per cent and in lower middle-income countries, at 7.3 per cent.”[6] The ILO projects that “global hours worked in 2021 will be 4.3 per cent below pre-pandemic levels (the fourth quarter of 2019), the equivalent of 125 million full-time jobs.”[7] The “great divergence” between the high and low-income countries in impact on jobs has been due to great asymmetry in vaccine roll out and fiscal stimulus.[8]

Thanks to Covid, poverty has deepened around the world. As per the IMF, “About 65 million to 75 million people may have entered into extreme poverty in 2020 with 80 million more undernourished compared to pre-pandemic levels.”[9]

Countries were forced to introduce travel restrictions, border controls and new regulations on account of public health concerns. This slowed down the global trade growth, Although some recovery is visible, it is uneven at this stage. The WTO warns that the pandemic continues to pose “potentially bigger risks to world trade and output” if new variants emerge in future.[10]

Covid led to supply chain disruptions which affected a lot of industries, particularly semiconductors, which in turn affected the automobile sector and mobile phones, computers and connected sectors. The dependence upon China both as a supplier and consumer affected industries at a global scale. The fear of decoupling of China from the global economy due to increasing tensions between the US and China have not gone away. In 2022 we may see the continuation of the trend to de-risk supply chains and supply chain vulnerabilities.

Technology has come to the rescue to some extent. Digitalisation has picked up the pace. New norms of behaviour have been introduced. Work from home and online education has become popular. But this will change the nature of work and that of education. Prolonged lockdowns have been difficult to bear for most people. The psychological impact of these changes, particularly on mental health, will need to be studied.

The Geopolitical Impact of the Pandemic

The pandemic emerged suddenly in 2020 when geopolitical tensions were rising. Owing to its global footprint and impact, it is reasonable to assume that the pandemic will have a significant long term direct and indirect impact on geopolitics. The rise of China, the growing tensions between the US and China, the tensions between Europe and Russia, the emerging strategic convergence between China and Russia, the growing salience of the Indo-Pacific, the instabilities in the Middle East and the churning in Europe have been around for a while. Due to its highly widespread disruptive impact, the pandemic has accentuated the geopolitical trends and introduced some new ones.

Global cooperation and multilateralism have been the first casualty of the pandemic. Although the health crisis is global, most countries prioritized their narrow interests over those of others. The emergence of stark vaccine inequity has shown that the pandemic has adversely impacted global cooperation. Most leaders who spoke at the UNGA and other leading international fora have lamented the lack of world solidarity in dealing with the pandemic when it was required the most. National interests have come to be defined narrowly as country after country hunkered down its borders and turned protectionist. This trend may continue.

The disruption of global supply chains has exacerbated tensions. Supply chains are being reconfigured due to the pandemic. This trend is likely to continue. The contours of a new supply chain map, however, remains unclear. Finding alternative supply chains will be a long drawn process.

Vaccine diplomacy has become central to geopolitics. China claims it has supplied 1.8 billion doses of vaccines to developing countries and promised a billion more. It has used vaccines to complement its Belt and Road Initiative (BRI) programme. The US is also stepping up its vaccine donation programme. The Quad (US, India, Australia, Japan) has a prominent vaccine cooperation initiative aimed at supplying 2 billion doses to countries in the Indo-Pacific region. Vaccine diplomacy seems to serve the geopolitical interests of these nations.

A realisation has dawned that health security is an essential component of national security. Public health has emerged as a global issue. Health issues have been securitised. The WHO has been politicised and the efforts to pin down responsibility for the origin of the virus have been thwarted by China. A lot of money has gone into vaccines. This may affect the availability of research funding in other areas of public health. The western pharmaceutical companies engaged in vaccine research and development, manufacturing etc will stand to gain. They are reluctant to free up the IPRs for the developing world.

China is central to the resolution of the vexing question as to how the pandemic originated. It has generally blocked proper international cooperation. It has sought to ‘punish’ Australia for daring to question China. Projecting that the western countries as being inept and insensitive in handling the pandemic, it has put forward the narrative of the superiority of its own political and governance system over the western democratic system. China is also affected by the supply chain disruptions and the trend towards ‘decoupling’ which seems to be underway. China’s assertiveness vis a vis has increased in the post-pandemic period.

Even before the pandemic, the US-EU relations were considerably strained due to Trump’s highly critical statements. He even put several European countries including Germany under trade sanctions. Although Biden has sought to reverse the damage by reengaging with Europe and giving prominence to NATO, G7 and climate change, the transatlantic alliance is still a pale shadow of its former self as it is unable to come to a definite conclusion about dealing with China. The growing tensions between Russia and NATO have created a lot of tension in Europe.

Affected by demographic decline due to ageing populations, many countries have suffered a large number of deaths during the pandemic. Russia, which has seen a huge decline in population is finding the recent spate of pandemic related deaths unbearable.

The pace of digitalisation has increased in the wake of the pandemic. But this has also brought the increased threat of cyber attacks and disruptions. New vistas have opened up in the area of technology and public health. The labour scene has changed dramatically. These trends will shape geopolitics in 2022.

The world is at an infelction point. The pandemic has outlined the fact that the world is a family and we are in the same boat. Yet, narrow sectarian thinking underlines national responses to global threats. The UN Secretary-General, in his report Our Common Agenda, observed, “The coronavirus disease (COVID-19) is upending our world, threatening our health, destroying economies and livelihoods and deepening poverty and inequalities…Conflicts continue to rage and worsen…The disastrous effects of a changing climate – famine, floods, fires and extreme heat – threaten our very existence.”[11] To meet these challenges, he gave a call for a “ new global consensus” on what our future should look like, and what we can do today to secure it.

In 2022, we should expect the rebalancing of power relations to continue. One has to wait and watch what trajectory the pandemic stakes. But, it has raised several question marks about multilateralism, globalisation, economic growth, health security, disruptions in supply chains that affect global trade, finance, logistics, digital economy, poverty alleviation and the achievability of UN’s sustainable development goals etc.

The pandemic will play a critical role in shaping the future.

Endnotes :

[1]https://covid19.healthdata.org/global?view=cumulative-deaths&tab=trend
[2]Ibid.
[3]https://sgp.fas.org/crs/row/R46270.pdf
[4] “A broad-based economic recovery requires an end to the pandemic”,https://www.imf.org/external/pubs/ft/fandd/2021/12/Pandemic-Economics-Agarwal-Gopinath.htm
Accessed on 22.12.2021.
[5]Ibid.
[6] “ILO: Employment impact of the pandemic worse than expected”, https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_824098/lang--en/index.htm, accessed on 22.12.2021.
[7]Ibid.
[8]Ibid.
[9]Fiscal Monitor, International Monetary Fund, October 2021, p. 2
[10]https://www.wto.org/english/tratop_e/covid19_e/faqcovid19_e.htm
[11] Summary of Secretary-General's report"Our Common Agenda", https://www.un.org/en/content/common-agenda-report/summary.shtml.

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>


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