GLOBALink | World Bank economist disappointed by vaccine nationalism, calling for trade openness

Source: Xinhua| 2021-09-29 22:58:23|Editor: huaxia

Vaccine nationalism amid the COVID-19 crisis has been disappointing, said Aaditya Mattoo, World Bank chief economist for East Asia and Pacific Region, urging policymakers to boost trade openness to rein in the virus and support recovery.

"I am a trade economist and all my life, I believed that production should happen where it is most efficient and then be distributed to where there is greatest need," Mattoo told Xinhua in a remote video interview Monday.

"But this crisis has disappointed me because instead of countries pursuing a globally optimal cooperative strategy, there has been what we call vaccine nationalism," Mattoo said.

According to the World Bank's East Asia and Pacific Fall 2021 Economic Update, vaccination in the region faces three major constraints, as availability held back vaccination rates in larger countries like Indonesia, the Philippines and Vietnam, smaller, poorer countries are constrained by limited distribution infrastructure, and there is also vaccine hesitancy.

Faced with vaccine nationalism, Mattoo said "perhaps not nationally, but at least regionally," it is necessary to have reliable supplies, so countries are "not hostage to a situation where other countries do not share vaccines."

In addition, the trade economist called for allowing easier access and facilitating transfer of vaccine technology, where the whole world can work together to expand production now.

"You see the perverse result of a strategy that just focuses domestically, because if you do not suppress infection outside your country, you will remain vulnerable to the emergence of new variants," he said.

"We might be condemned to a perpetual race between vaccines and variants, and we need to win that race globally, not nationally," he added.

The World Bank estimates that most countries in the East Asia and the Pacific region can vaccinate more than 60 percent of their populations by the first half of 2022, which would significantly reduce mortality, allowing a resumption of economic activity.

Apart from vaccination, Mattoo said there needs to be a complimentary strategy, which consists of precautionary behaviors, such as wearing masks, social distancing, as well as sustained testing, tracing and isolation, calling it the "second arrow in our quiver" to deal with this disease.

The latest report noted that the East Asia and Pacific region's recovery has been undermined by the spread of the COVID-19 Delta variant, and growth forecasts have been downgraded for most countries in the region.

While China's economy is projected to expand by 8.5 percent, up 0.4 percentage point from April projection, the rest of the region is forecast to grow at 2.5 percent, 1.9 percentage points less than forecast in April, the report showed.

Noting that there is variation across countries, Mattoo said some countries like China have been relatively successful in at least keeping this virus at bay, but other countries which had done well previously, especially like Vietnam and Malaysia, are now struggling to contain it and are suffering a "significant" contraction in economic activity.

Others like the Philippines and Indonesia, he continued, had always struggled and their struggles have been "worse," so they are also seeing a contraction in economic activity and forecasts for them are less promising than before.

Mattoo laid out three major reasons for China's strong recovery: China's efficiency in containing the disease; China's robust exports, supported by sustained recovery abroad; the government's capacity to provide support.

The economist, however, noted that there are also challenges China needs to address, as the disease is not conquered, global demand has peaked, geopolitical tensions can affect trade, and macro-prudential policies need to avoid instability.

He also noted that a country like China can "take initiatives as it's already doing to revive multilateral cooperation."

Global cooperation is not only needed on vaccination, on trade, but also on macro economic policy, Mattoo said, as coordinated stimulus is mutually reinforcing and will be more powerful.

"The one risk is that when one country provides stimulus, others are sometimes tempted to hold back and that can then also create trade tensions, where you feel they are not doing their share," he said.

"So both from a purely economic point of view, but also from a political stability point of view, coordinated policies are desirable," he added.

The World Bank economist noted that trade has remained resilient for countries in the region despite the pandemic, but there are export restrictions and supply chain disruptions.

"The best response to protectionism abroad is more trade openness at home, and more trade facilitation" within the region, Mattoo said. "We showed that actually would lead to even faster growth in the region, than retaliating through protection."

The trade economist noted that trade has been the engine of growth for all the countries, "any successful country," not just in the region.

"So at this stage, even if some countries are beginning to doubt the benefits of globalization and retreating from it, I do not think the region should," he said.

Beyond containing COVID-19, the World Bank also called on policymakers to adopt a comprehensive strategy to boost inclusive growth, including increasing public investment in hard and soft infrastructure, like clean energy, transport, health systems and schools, improving social protection systems, and supporting broader technology diffusion.

"So I would say contain the disease, ensure stable macro policy for recovery, and then work hard on structural reforms for long-term growth," Mattoo said.

"A crisis is an opportunity (that) changes the political economy and the time to take advantage of it is now," he added.

Produced by Xinhua Global Service

KEY WORDS: Bank economist,disappointed by vaccine,calling for trade,Xinhua Global Service,World Bank