The effect of the Delta variant in uncertain times
For Bangladesh, the Delta variant of Covid-19 virus couldn't have come at a worse time. Starting in January, our infection rate had been going down and was below 300 per day in mid-February. Then Bangladesh experienced a rise in infection and death rates in the wake of the spread of the Delta variant in India. The subsequent cancellation of the contracted SII vaccine shipment to Bangladesh compounded its woes. Now, everyone is talking about breakthrough cases, long Covid, booster shots, the third dose (for Pfizer), the Lambda variant, and the possibility of the world fractured once again between the North and the South.
While the previous characterisation may appear to be an over-dramatisation, it is closer to reality than it sounds. Bangladesh's economy fared much better than many other developing countries as it bounced back a few months ago from the earlier phases of the pandemic. Now, it will not be an exaggeration to say that the Delta variant, along with the talk of breakthrough infections—cases where fully-vaccinated people get infected—and the uncertainty relating to a global economic recovery, will continue to plague the engine of GDP growth. It is already casting its shadow on financial markets. While the Tokyo Olympics, however scaled back, has kept us distracted for a few weeks until August, eventually reality will sink in and we need to ask: "When and how can we get rid of this Covid spectre once and for all?"
In a recent article in the Boston Globe, Professor Katherine Gergen Barnett, MD, of Boston University wrote, "As Covid-19 rates are rising again and the Delta variant is spreading at dramatic rates in largely unvaccinated American states, partially vaccinated countries, and globally where access to vaccines has been poor, the fantasy of arriving at our 'final destination'—the post-Covid-19 world—appears to be quickly slipping away." Garnett is vice chair of Primary Care Innovation and Transformation in the Department of Family Medicine at Boston Medical Centre, clinical associate professor at the Boston University School of Medicine, and a fellow at the Boston University Institute for Health Systems Innovation and Policy.
I asked an infectious diseases specialist, "Since I have been fully vaccinated, can I be sure that I will not get the Delta or die from it?" He hesitated for a few seconds, and said, "I wish I can give you a straight answer". On TV, epidemiologists are making contradictory guesses, for example, "Either there's lots of unseen spread of Delta among the vaccinated, or hardly any". On July 27, the CDC in the USA advised even the fully vaccinated to wear masks in indoor settings. Representatives from the Robert Koch Institute (RKI), Germany's centre for disease control, offered a bleaker picture. To reach herd immunity, they said, 85 percent of those aged 12 to 59 would need to be vaccinated, as well as 90 percent of all those above the age of 60. Out of frustration, Germany's Der Spiegel announced, "Herd Immunity is Impossible. Now What?"
There is no doubt that the timeline for herd immunity is receding, and so is the immediate prospect of the so-called final destination.
Let me reassure the readers that Bangladesh is not alone in facing a future that is uncertain, unpredictable and unmapped. The Delta variant has emerged as a "black swan" for the world economy which has been struggling under the Covid pandemic since March 2021. The IMF has in its latest forecast for the global economy cautioned that Delta variant has introduced considerable uncertainty, given the unpredictable course taken by the pandemic, especially in emerging-market economies and finally conceded that its forecasts outlined in its Economic Outlook remains uncertain. In a nutshell, the effect of the Delta variant in these precarious times is slower global recovery and massive redistribution of wealth.
The variant, which some have also compared to the bubonic plague of the 14th century, has unleashed unfounded speculations and total disarray even in the scientific community. Now, after months of vaccination and an uptick of the Delta variant, ordinary people are confused and fatalistic, believing at the same time that Covid is rarer, more random, and more fatal than it is.
Trudie Lang, director of the Global Health Network at the University of Oxford's Nuffield Department of Medicine, said the Delta variant was an important factor in leading to new mutations and would continue to gradually drive out old ones. The WHO has already warned that, based on the estimated transmission advantage of the Delta variant, "it is expected that it will rapidly outcompete other variants and become the dominant circulating lineage over the coming months."
In its latest weekly report on Wednesday, the WHO noted that as of July 20, the prevalence of Delta among the specimens sequenced over the past four weeks exceeded 75 percent in many countries worldwide including Australia, Bangladesh, Botswana, China, Denmark, India, Indonesia, Israel, Portugal, Russia, Singapore, South Africa and the UK. For many of these countries, the variant has had the effect of wrecking any confidence in the recovery and by increasing uncertainty about the shape of things to come. In the USA, last week, the headlines in the prestigious Wall Street Journal ranged from the entire spectrum from pessimism to optimism. "Variant Can Still Clip US Economy's Wings" (July 22) and "Delta Variant of Covid-19 Isn't Expected to Dent Robust US Recovery" (July 23). In the UK, the Financial Times was more global. "The Spread of the Delta Variant Bodes Ill for the World Economy".
This type of contradiction is also reflected in the latest pronouncements from the IMF and European Bank. Kristalina Georgieva, IMF's managing director, last week told a webinar that while its projection for world economic growth in 2021 will stay at the 6 percent forecast in April, the outlook for rich countries with speedy vaccination programmes has improved, while the outlook for poor countries has weakened! "The reopening of large parts of the economy is supporting a vigorous bounceback in the services sector," Christine Lagarde, president of the European Central Bank, told reporters Thursday. "But the Delta variant of the coronavirus could dampen this recovery in services, especially in tourism and hospitality."
Of course, all this is not entirely due to the Delta variant but the uncertainty about the road ahead is shattering any confidence in the recovery. The global supply problems that accompanied a rapid surge in demand earlier this year have yet to be resolved. "Continued price increases for labour, raw materials and transportation threaten to keep inflation elevated. And the spread of the new Delta variant could damp business optimism and consumer confidence."
Experts say it's still too early to say whether that will keep people home, as in previous spikes, slowing the economy and weakening the stock market. "We have to see how behaviour changes," says Michelle Meyer, head of US economics at Bank of America. Meyer said that her economic forecast hasn't changed, but the risk factors are increasing. "What we've seen throughout the course of this year has been an extraordinary increase in spending on activities, leisure," she tells Barron's. "The Delta variant, and the rise in Covid cases can disrupt that trend in a way that would be problematic for the economy."
The IMF report tried to add a sprinkle of hope. "Concerted, well-directed policies can make the difference between a future of durable recoveries for all economies or one with widening fault lines—as many struggle with the health crisis while a handful see conditions normalise, albeit with the constant threat of renewed flare-ups", it said.
Dr Abdullah Shibli is an economist and IT consultant. He is also Senior Research Fellow of International Sustainable Development Institute (ISDI), a think tank based in Boston.