How COVID-resilient is Australia?

Chief Economist's View

Download the PDF version including our economic update by region here: How COVID-resilient is Australia? 

Except for Israel and the UAE, where 32% and 27% of the population have received jabs, the roll out of COVID-19 vaccines has been excruciatingly slow. Outside of Israel and the UAE, leaders of the COVID vaccine roll out are the US and the UK.

But even in these countries which have originated the vaccines, only 11% of the population has been inoculated in case of the UK and only 7% for the US. Elsewhere, the roll out is between zero percent, as in many countries the vaccination program has yet to begin, and 3% (in the case of Denmark); for the euro area as a whole only about 2% have received a jab.

But also of concern is the unequal distribution of the vaccine. A handful of rich countries dominate the distribution, having purchased over 4 billion doses of the total global supply of 7 billion doses of the various vaccines. Low and middle-income countries mainly have access to the vaccine through the COVAX partnership, but this only covers around 20% of their populations; far short of the 60% required for herd immunity.

The vaccine roll-out rate is very low within most countries in the east Asia region, with many countries, including Australia, yet to commence their immunisation programs. Even China, which is producing its own vaccine, has only inoculated around 1% of its population to date.

However, vaccine roll-out is only one factor influencing the resilience of an economy to COVID-19. Other key factors are: rates of infection; death rates; and access to vaccines. Here the news in our region is more positive.

According to the closely followed Bloomberg COVID Resilience Index, Asian countries dominate the top ten COVID-resilient countries, including New Zealand, Singapore, Australia, Taiwan, China, Japan, Hong Kong and Vietnam. At the other end of the spectrum of the 53 countries covered by the Index, no East Asia countries appear in the bottom ten.

The strength of the region is its relatively low case rates and death rates. The weakness of the region is its low vaccine coverage of the population. In fact, most countries of our region have not yet procured enough vaccines to achieve herd immunity of an immunisation rate of the population, including Taiwan, Vietnam, Thailand, Malaysia, Philippines, Bangladesh and Pakistan.

What about Australia? How has our response been and how do we sit now in comparison to the rest of the world?

Australia is amongst a handful of nations that have pursued an aggressive suppression strategy. Our mostly successful implementation of this strategy has meant that we have extremely low case rates and death rates.

We also have a very high vaccine population coverage, having purchased enough doses to cover more than twice the population. Our weak point, in common with the rest of our region, is our late roll out of the vaccine, which is yet to begin and not scheduled to start until late February.

Our high population vaccine coverage rate means that we should be able to achieve herd immunity if there are no supply-chain bottlenecks. On the downside, we’re subscribing predominantly to the AstraZeneca vaccine, which only has a 70% efficacy rate and the other vaccine we’re predominantly subscribed to, Novavax, hasn’t yet completed its phase 3 trials.

Also, CSL the main Australian based producer of vaccines, does not have capacity to produce the Novavax vaccine until it has completed production of the AstraZeneca vaccine, which won’t be until the second half of the year. With delays in the production of some vaccines already occurring overseas there is a risk that we may not achieve herd immunity levels of vaccine inoculations by year’s end.

But overall, we have been and remain among the most resilient countries to COVID-19. The Bloomberg index ranks us the third most COVID resilient country in the world behind New Zealand and Singapore.

Table 1: Financial market movements: 21 - 28 January 2021

Source: Bloomberg