What's Vaccine Economics?

Stop-start Covid-19 restrictions have complicated conditions in emerging markets so far this year, exacerbated by the Delta variant in recent months. That said, the rollout of vaccines has had a dramatic impact on economic prospects. Take the Philippines and Turkey—two important EM economies with large domestic markets—over the past six months for example: Both countries have been hit harder in 2021 by the virus in terms of new cases than last year, but Turkey began its vaccination campaign back in mid-January, roughly two months before the Philippines. As of 6 September, Turkey had been able to administer 116.2 doses per 100 people of the total population—by no means a showstopper—while the Philippines lags at just 32.4. As a result, while Turkey has been able to gradually loosen restrictions, the Philippines has had no choice but to keep tough measures in place.   


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This has had a massive impact on the economies’ respective outlooks—as seen through the evolution of GDP forecasts since May. Turkey’s economic outlook continues to improve and high frequency data points to further surprises on the upside, while the Philippines’ deteriorating outlook is littered with headwinds. Although an array of factors has been at play in recent months, the overarching narrative has been dominated by vaccine availability. Our panel of experts sees GDP expanding 6.9% in Turkey and 4.7% in the Philippines in 2021. 

Insights from Our Analyst Network

Commenting on the Philippines’ economic prospects, Nicholas Mapa, a senior economist at ING, noted: 

“The resumption of lockdowns in April and in August have derailed the economic recovery with the economy backtracking by 1.3% in 2Q. We can expect this trend to continue in the second half of the year. [..] Fiscal stimulus may also be warranted to reverse the economic downturn but it appears that the authorities will cut back on spending to preserve debt metrics after the recent Fitch outlook revision.” 

Commenting on the current state of play in Turkey, analysts at JPMorgan noted: 

“Turkey recorded a surprising 3.7% (SAAR) GDP gain in Q2 2021 as service-sector activity expanded strongly. With mobility rebounding further this quarter and tourism quite strong, service-sector activity is continuing its recovery. [..] High-frequency data support the case for continued strong growth. As a result of all these factors and of the upside revision to 1Q data, we have raised our 2021 GDP growth forecast to 8.4% (yoy) from 6.8%. We keep the 2022 forecast unchanged at 3.4%, but the risks to this forecast are to the upside especially if there are early elections.”  

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Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinion of FocusEconomics S.L.U. Views, forecasts or estimates are as of the date of the publication and are subject to change without notice. This report may provide addresses of, or contain hyperlinks to, other internet websites. FocusEconomics S.L.U. takes no responsibility for the contents of third party internet websites.

Author: Steven Burke, Economist

Date: September 9, 2021

Twitter @FocusEconomics

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