People wait to receive Covid-19 vaccines during a mass vaccination drive in Jakarta, Indonesia, on June 16. Photo: Xinhua
Opinion
David Liao and Surendra Rosha
David Liao and Surendra Rosha
Why a sustainable global recovery can’t afford to leave any country behind
Without cooperation on access to vaccinations, economic policies and – most importantly for ensuring long-term growth – climate change, any recovery will be short lived
Covid-19 has not been beaten yet, but as vaccines become more broadly available, we need to look beyond the successes of individual countries to what a global recovery should look like.
The pandemic remains a global challenge. China was the only major economy that managed to avoid contracting during 2020, and even then growth was about a third of its normal level. The recovery in China and the US should not blind us to the fact that the future prosperity of every nation is inextricably tied to the prosperity of all others in an interconnected world.
This is particularly true in Asia, where fates are knitted together by networks of supply chains. If individual nations try to go it alone, without regard for the welfare of their neighbours, it will amplify inequalities between and within countries and hinder the drive to get the continent back to its full potential.
For a truly global and sustained recovery, governments and the private sector around the world need to cooperate in three key sectors. They must ensure access to vaccinations, enact mutually supportive economic policies and – most importantly for ensuring long-term growth – tackle climate change.
That even countries which have been successful in dealing with Covid-19 are struggling to reopen their borders and economies illustrates the importance of raising global vaccination rates.
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England lifts Covid-19 restrictions as infections surge
England lifts Covid-19 restrictions as infections surge
The problems of vaccine availability and vaccine scepticism are more closely related than they at first seem. As more vaccines become available to more people, especially in emerging economies, the low rate of medical complications is likely to convince more sceptics that it is safe.
But triggering this virtuous feedback loop is dependent on affordability as much as availability. Many developing nations are struggling – Bangladesh has managed just 6.1 vaccine shots per 100 people and the Philippines 14.3, while mainland China stands at 104 and Singapore 117.
In a deeply interconnected world, this is a clear case where looking after those at home means looking after one’s neighbours and where generosity and self-interest are indistinguishable. Countries must come together to help one another to both make vaccines more broadly available and, if necessary, help pay for them.
Full economic recovery cannot happen in isolation, which is why criticism of vaccine assistance to less-fortunate neighbours and trading partners is misguided. But vaccine coordination will not be enough on its own as the second challenge is coordinating the global economic response to recovery.
The recovery we have seen so far has been deeply uneven, with emerging economies faring worst. The predominantly rich countries that have the good fortune to escape the pandemic’s economic shadow first need to recognise the fragility that still plagues many of their neighbours.
Specifically, they need to think carefully if and when they feel the necessity to wind down accommodative monetary policies or raise interest rates to counter inflation. In 2013, even the suggestion that the US was ending quantitative easing triggered the “taper tantrum” – a destabilising flight of capital from emerging economies.
If something similar happened today, when many Asian nations are still struggling to stay afloat amid a second, third or fourth wave of Covid-19, the economic repercussions and human suffering could be devastating.
But despite the importance of maintaining stability, it is the third challenge which will define humanity’s future in the long term. An unsustainable recovery is a contradiction in terms, and no amount of vaccine coordination or economic collaboration will save us from ourselves unless we can build back better.
It will be expensive, but the idea that there is a trade-off between growth and sustainability is a false dilemma. Estimates of the cost of halting and rolling back climate change range from hundreds of billions to more than US$5 trillion a year. Whatever the real figure, it will be cheaper in the long run than returning to unsustainable growth.
Asia is on the front line, and addressing the issues will take a combination of cash and global political will. The cash is available: a recent report estimated that half the global assets under management – some US$43 trillion – have been earmarked for sustainable investment. Governments and corporations have an opportunity to turn the green transformation into a growth opportunity.
The alternative is unthinkable. The environment is a third superpower – implacable, without remorse and impervious to intimidation. The only weapon that can help us manage it is a global alliance. In a recent report, the Intergovernmental Panel on Climate Change warned we are likely to be much closer to crucial climate tipping points than we believed.
Recovery is within reach, but it is fragile and needs to be nurtured by the whole global community if it is to take root. In this case, altruism really is just another form of self-interest.
David Liao and Surendra Rosha are co-chief executives, Asia-Pacific, at HSBC
