IMF

Recent estimates of global effects from Russian invasion of Ukraine

Terence P. Stewart · April 19, 2022 · Sanctions on Russia following its invasion of Ukraine · IMF, Russian Federation, Ukraine, WTO · No Comments

As Russia’s unprovoked war against Ukraine moves through its eighth week, a variety of reports from multilateral organizations explain the severe global fallout from the war as well as the crippling effects on the Ukrainian economy.

On April 13, 2022, the World Bank, IMF, the UN World Food Program and WTO issued a joint statement which is copied below.

“WASHINGTON, 13 April 2022— The Heads of the World Bank Group (WBG), International Monetary Fund (IMF), United Nations World Food Program (WFP), and World Trade Organization (WTO) today called for urgent action on food security. World Bank Group President David Malpass, IMF Managing Director Kristalina Georgieva, WFP Executive Director David Beasley and WTO Director General Ngozi Okonjo-
Iweala issued the following joint statement ahead of the Spring Meetings of the IMF and World Bank Group next week:

“‘The world is shaken by compounding crises. The fallout of the war in Ukraine is adding to the ongoing COVID-19 pandemic that now enters its third year, while climate change and increased fragility and conflict pose persistent harm to people around the globe. Sharply higher prices for staples and supply shortages are increasing pressure on households worldwide and pushing millions more into poverty. The threat is highest for the poorest countries with a large share of consumption from food imports, but vulnerability is increasing rapidly in middle-income countries, which host the majority of the world’s poor. World Bank estimates warn that for each one percentage point increase in food prices, 10 million people are thrown into extreme poverty worldwide.’

“‘The rise in food prices is exacerbated by a dramatic increase in the cost of natural gas, a key ingredient of nitrogenous fertilizer. Surging fertilizer prices along with significant cuts in global supplies have important implications for food production in most countries, including major producers and exporters, who rely heavily on fertilizer imports. The increase in food prices and supply shocks can fuel social tensions in many of the affected countries, especially those that are already fragile or affected by conflict.’

“‘We call on the international community to urgently support vulnerable countries through coordinated actions ranging from provision of emergency food supplies, financial support, increased agricultural production, and open trade. We are committed to combining our expertise and financing to quickly step up our policy and financial support to help vulnerable countries and households as well as to increase domestic agricultural production in, and supply to, impacted countries. We can mitigate balance of payments pressures and work with all countries to keep trade flows open. In addition, we will further reinforce our monitoring of food vulnerabilities and are quickly expanding our multi-faceted policy advice to affected countries guided by the comparative advantages of our respective institutions.’

“‘We also urge the international community to help support urgent financing needs, including through grants. This should include financing of immediate food supplies, safety nets to address the needs of the poor, and for small farmers facing higher input prices. We also urge all countries to keep trade open and avoid restrictive measures such as export bans on food or fertilizer that further exacerbate the suffering of the most vulnerable people. It is especially important not to impose export restrictions on humanitarian food purchases by the UN’s World Food Program.’

“‘It is critical to quickly provide support for food insecure countries in a coordinated manner. We stand ready to work together with our multilateral and bilateral partners to help countries address this urgent crisis.’”

Joint Statement: The Heads of the World Bank Group, IMF, WFP, and WTO Call for Urgent Coordinated Action on Food Security, April 13, 2022, https://www.worldbank.org/en/news/statement/2022/04/13/joint-statement-the-heads-of-the-world-bank-group-imf-wfp-and-wto-call-for-urgent-coordinated-action-on-food-security

The World Bank has estimated that the Ukrainian economy will decline by 45% or more because of the war. Reuters, War to slash Ukraine’s GDP output by over 45%, World Bank forecasts, April 10, 2022, https://www.reuters.com/world/us/war-slash-ukraines-gdp-output-by-over-45-world-bank-forecasts-2022-04-10/. Effects in other countries are a combination of the war’s effects on prices of a number of agricultural and non-agricultural goods where Russia, Ukraine and/or Belarus are important global suppliers, supply chain disruptions that have continued from the pandemic and other inflationary pressures. So for example, the OECD has estimated the first year effects of the war and other challenges will reduce global GDP and will add to global inflation though the effects will vary by geographic area. OECD Economic Outlook, Interim Report, Economic and Social Impacts and Policy Implications of the War in Ukraine, MARCH 2022, https://www.oecd-ilibrary.org/docserver/4181d61b-en.pdf. Figure 5 from page 7 of the OECD paper provides estimates of the impact on GDP and on inflation for the Euro area, OECD countries in total, United States, World and World excluding Russia.

Similarly, Figure 3 from page 5 of the report shows the price increases for products where Russia and Ukraine are important sources of global trade.

The World Bank looks at various regions of the world in their Spring reports which show varying effects from the war. See World Bank, Reality Check: Forecasting Growth in the Middle East and North Africa in Times of Uncertainty, April 2022, https://openknowledge.worldbank.org/bitstream/handle/10986/37246/9781464818653.pdf (per capita GDP, “11 out of 17 MENA economies may not recover to pre-pandemic levels by the end of 2022″); World Bank, Africa’s Pulse, An Analysis of Issues Shaping Africa’s Economic Future, Boosting Resilience: The Future of Social Protection in Africa, April 2022 (Vol. 25), https://openknowledge.worldbank.org/bitstream/handle/10986/37281/9781464818714.pdf (Growth in Sub-Saharan Africa is projected to decelerate from 4% to 3.6% in 2022, and estimated at 3.9% or 4.2% in 2023 and 2024 respectively. The growth deceleration in 2022 reflects several short-term headwinds, the slowdown in the global economy, lingering effects of the coronavirus pandemic, elevated inflation, rising financial risks owing to high public debts reaching unsustainable levels, continued supply disruptions, and the war in Ukraine.”); World Bank, South Asia Economic Focus, Reshaping Norms: A New Way Forward, Spring 2022, https://openknowledge.worldbank.org/bitstream/handle/10986/37121/9781464818578.pdf (“South Asian economies are emerging from the deep COVID-19 recession, burdened by high inflation, rising current account deficits, and deteriorated fiscal balances, which are exacerbated by the impact of war in Ukraine. Even as the impact of the pandemic on growth is subsiding, partly because of increases in vaccination rates, the economic scars left behind after two years of the pandemic are deep. Inflation and deficits in trade balances reflect supply bottlenecks, pent-up demand, and rising commodity prices in international markets. Support measures and reduced revenues have deteriorated fiscal balances. All these problems have become more pressing because of the immediate impact of the war in Ukraine, which has pushed up prices of oil and other commodities in international markets.”); World Bank, Europe and Central Asia Economic Update, War in the Region, Spring 2022, https://www.worldbank.org/en/region/eca/publication/europe-and-central-asia-economic-update (“The war is having a devastating impact on human life and causing economic destruction in both countries, and will lead to significant economic losses in the Europe and Central Asia (ECA) region and the rest of the world. It is the second major shock in two years to trigger an economic contraction in the region,
with output in 2022 forecast to contract 4.1 percent—twice as steep as the recession in 2020 from the COVID-19 pandemic.”); World Bank, Semiannual Report for Latin America and the Caribbean, Consolidating the Recovery: Seizing Green Growth, April 2022, https://openknowledge.worldbank.org/bitstream/handle/10986/37244/9781464818677.pdf (“The Russian invasion of Ukraine in late-February 2022 has both imposed a drag on the regional recovery and injected vast uncertainty. Prices of wheat and energy soared in the immediate aftermath. Meanwhile, a new set of supply-chain disruptions—both arising from the war and from a new COVID lockdown in China—present
stagflationary forces that will complicate the job of monetary authorities. The direct depressive effects on global output may be modest, but the increased uncertainty and the sharp (even if short-term) rise in commodity prices will have first-order effects.”); World Bank, East Asia and the Pacific Economic Update, Braving the Storms, April 2022, https://openknowledge.worldbank.org/bitstream/handle/10986/37097/9781464818585.pdf (“At the beginning of 2022, the EAP countries appeared to be on the path of sustained recovery. The region had emerged from the difficult Delta wave and suffered relatively little from omicron wave. External trade and financial conditions remained benign, and governments were contemplating fiscal consolidation. since then, the acceleration in Us inflation prompted faster-than expected financial tightening, China saw a spike in CoViD-19 infections and continued strains on overleveraged real estate firms, and Russia invaded Ukraine. While some larger countries may be better equipped to weather these shocks, the repercussions of these events will dampen the growth prospects of most in the EAP region. Projections for regional growth in 2022 have therefore been reduced from 5.4 percent in the previous Update to 5 percent. In a low case scenario, if global conditions worsen and national policy responses are weak, growth could slow to 4 percent.”).

The World Trade Organization recently released a paper looking at the implications of the war in Ukraine on global trade and development. WTO, The Crisis in Ukraine, Implications of the war for global trade and development, April 2022, https://www.wto.org/english/res_e/booksp_e/imparctukraine422_e.pdf. The Executive Summary from the WTO paper is copied below.

“The crisis in Ukraine has created a humanitarian crisis of immense proportions and has also dealt a severe blow to the global economy. The brunt of the suffering and destruction are being felt by the
people of Ukraine themselves but the costs in terms of reduced trade and output are likely to be felt by people around the world through higher food and energy prices and reduced availability of goods exported by Russia and Ukraine. Poorer countries are at high risk from the war, since they tend to spend a larger fraction of their incomes on food compared to richer countries. This could impact political stability.

“From a macroeconomic perspective, higher prices for food and energy will reduce real incomes and depress global import demand. Sanctions will impose economic costs on not only Russia directly but also on its trading partners. Besides Russia and Ukraine, depressed gross domestic product (GDP) will probably be seen mostly in Europe given the region’s geographic proximity and its dependence on Russian energy. Trade costs will rise in the near term due to sanctions, export restrictions, higher energy costs and transport disruptions. As a result, the impact the war will have on world trade in 2022 could be greater than the impact on global GDP.

“While shares of Russia and Ukraine in world trade and output are relatively small, they are important
suppliers of essential products, notably food and energy. Both countries accounted for 2.5 per cent in
world merchandise trade and 1.9 per cent in world GDP in 2021. Yet they supplied around 25 per cent of wheat, 15 per cent of barley and 45 per cent of sunflower products exports in 2019.1 Russia alone accounted for 9.4 per cent of world trade in fuels, including a 20 per cent share in natural gas exports. Many countries are highly dependent on food imports from Russia and Ukraine. For example, more than half of wheat imports in Egypt, the Lebanese Republic and Tunisia come from Russia and Ukraine. Other countries are more dependent on imports of fuels from Russia, such as Finland (63 per cent) and Turkey (35 per cent).

“Russia and Ukraine are also key providers of inputs into industrial value chains. Russia is one of the main suppliers globally of palladium and rhodium, key inputs in the production of catalytic converters in the automotive sector and the manufacture of semiconductors. Semiconductor production also depends
to a substantial extent on neon supplied by Ukraine, which further provides a number of low-tech products to the European automobile value chain, such as wire harnesses. Prolonged disruptions in the supply of these goods could harm the recovery of automobile manufacturing.

“Sanctions are already having a strong impact on Russia’s economy, with possible medium to long-term consequences. Disconnecting Russian banks from the SWIFT settlement system and blocking Russia’s use of foreign exchange reserves have triggered a sharp depreciation of the rouble, reducing real incomes in the country. Many international firms are also abandoning the Russian market. Oil and gas exports have yet to be strongly affected by the sanctions, but the crisis could accelerate the global transition towards greener energy sources.

“Longstanding economic relationships have been disrupted by the war and by the sanctions imposed in its wake. WTO economists have simulated various scenarios to illustrate the channels through which trade could be affected and to explore possible short-run and long-run effects. Global trade growth is projected to slow by up to 2.2 percentage points in 2022. Longer term impacts could also be large and consequential. There is a risk that trade could become more fragmented in terms of blocs based on geopolitics. Even if no formal blocs emerge, private actors might choose to minimize risk by reorienting
supply chains. This could reduce global GDP in the long run by about 5 per cent, notably by restricting
competition and stifling innovation.

“The WTO has an important role to play in mitigating the negative effects of the crisis and in rebuilding
a post-war global economy. Keeping markets open will be critical to ensure that economic opportunities remain open to all countries. This will be especially true in the post-war period, when businesses and families will need to repair their balance sheets and rebuild their lives. Through its importance for international trade and its monitoring, convening and other functions, the WTO is central to ensuring that international trade continues to serve billions of people across the world.”

Rising energy prices and reduced volumes of some basic agricultural products are receiving a lot of attention because of the increasing hunger, malnutrition, number of people suffering extreme poverty that flow from the challenges being experienced at the moment. For example, the FAO paper on April 8, 2022 (CL 169/3) reviews in detail the challenges for food security from the disruption in exports from Russia and Ukraine of many food products, spiking prices for fertilizers from Russia as well as rising energy costs. See FAO Council, 169th Session, 8 April 2022, Impact of the Ukraine-Russia conflict on global food security and related matters under the mandate of the Food and Agriculture Organization of
the United Nations (FAO), https://www.fao.org/3/ni734en/ni734en.pdf. The Executive Summary to the report is copied below.

“The war that began on 24 February 2022 has caused extensive damage and loss of life in key population centres, spread across rural areas, and sparked massive displacement. More than 3.6 million people had been forced to abandon their homes and flee across borders to safety. Millions more are internally displaced. It is clear that the war has resulted in a massive, and deteriorating, food security challenge and disrupted livelihoods during the agricultural growing season in Ukraine and has also affected global food security.

“Already prior to the war in Ukraine, international food prices had reached an all-time high. This was mostly due to market conditions, but also high prices of energy, fertilizers and all other agricultural services. In February 2022, the FAO Food Price Index reached a new historical record, 21 percent above its level a year earlier, and 2.2 percent higher than its previous peak in February 2011.

“The Russian Federation and Ukraine are prominent players in global trade of food and agricultural products. In 2021, wheat exports by the Russian Federation and Ukraine accounted for about 30 percent of the global market. Russia’s global maize export market share is comparatively limited, standing at 3 percent between 2016/17 and 2020/21. Ukraine’s maize export share over the same period was more significant, averaging 15 percent and conferring it the spot of the world’s 4th largest maize exporter. Combined, sunflower oil exports from both countries represented 55 percent of global supply. The Russian Federation is also a key exporter of fertilizers. In 2020, it ranked as the top exporter of nitrogen fertilizers, the second leading supplier of potassium, and the third largest exporter of phosphorous fertilizer.

“Nearly 50 countries depend on the Russian Federation and Ukraine for at least 30 percent of their wheat import needs. Of these, 26 countries source over 50 percent of their wheat imports from these two countries. In that context, this war will have multiple implications for global markets and food security, representing a challenge for food security for many countries, and especially for low-income food import dependent countries and vulnerable population groups.

“Joint, coordinated actions and policy responses are needed to address the current challenges for the
people most in need and to mitigate the impact on food insecurity at global level.”

The heads of the International Monetary Fund and the World Bank, in statements on April 14 and 12 respectively provide sobering summaries of the challenges facing the world, including the war in Ukraine, and the implications for food security, global growth (or contraction), and a range of critical issues needing global cooperation such as climate change. See IMF, Speech of Kristalina Georgieva, IMF Managing Director, “Facing Crisis Upon Crisis: How the World Can Respond,” April 14, 2022, https://www.imf.org/en/News/Articles/2022/04/14/sp041422-curtain-raiser-sm2022; World Bank, Addressing Challenges to Growth, Security and Stability – Scene-Setter Speech by World Bank Group President David Malpass, April 12, 2022, https://www.worldbank.org/en/news/speech/2022/04/12/addressing-challenges-to-growth-security-and-stability-scene-setter-speech-by-world-bank-group-president-david-malpass. Some excerpts are provided below.

IMF Managing Director Georgieva:

“To put it simply: we are facing a crisis on top of a crisis.

“First, the pandemic: it turned our lives and economies upside down—and it is not over. The continued spread of the virus could give rise to even more contagious or worse, more lethal variants, prompting further disruptions—and further divergence between rich and poor countries.

‘Second, the war: Russia’s invasion of Ukraine, devastating for the Ukrainian economy, is sending shockwaves throughout the globe.

“Above all is the human tragedy—the suffering of ordinary men, women, and children in Ukraine, among them over 11 million displaced people. Our hearts go out to them.

“The economic consequences from the war spread fast and far, to neighbors and beyond, hitting hardest the world’s most vulnerable people. Hundreds of millions of families were already struggling with lower incomes and higher energy and food prices. The war has made this much worse, and threatens to
further increase inequality.

“And for the first time in many years, inflation has become a clear and present danger for many countries around the world.

“This is a massive setback for the global recovery.

“In economic terms, growth is down and inflation is up. In human terms, people’s incomes are
down and hardship is up.

“These double crises—pandemic and war—and our ability to deal with them, are further complicated by another growing risk: fragmentation of the world economy into geopolitical blocs—with different trade and technology standards, payment systems, and reserve currencies.

“Such a tectonic shift would incur painful adjustment costs. Supply chains, R&D, and production networks would be broken and need to be rebuilt.

“Poor countries and poor people will bear the brunt of these dislocations.

“This fragmentation of global governance is perhaps the most serious challenge to the rules-based framework that has governed international and economic relations for more than 75 years, and helped deliver significant improvements in living standards across the globe.

“It is already impairing our capacity to work together on the two crises we face. And it could leave us wholly unable to meet other global challenges—such as the existential threat of climate change.

“It is a consequential moment for the international community.

“The actions we take now, together, will determine our future in fundamental ways. It reminds me of Bretton Woods in 1944 when, in the dark shadow of war, leaders came together to envision a brighter world. It was a moment of unprecedented courage and cooperation.

“We need that spirit today, as we face bigger challenges and more difficult choices.”

World Bank President Malpas:

“We are again living through a dangerous period of overlapping crises and conflicts with Poland near the center. I have been deeply shocked and horrified at Russia’s invasion of Ukraine, the atrocities committed against the civilian population, and the loss of life and livelihoods for millions of Ukrainians. The attacks on people and infrastructure are causing tremendous suffering, threatening international peace and security, and endangering the basic social and economic needs of people around the world.”

* * *

“Overlapping Global Crises

“The violence is unfortunately not confined to Ukraine. Just over the last year, we have witnessed serious setbacks for development and security, including Afghanistan’s collapse, Lebanon’s crisis, and coups and violence across the Sahel, Ethiopia, Somalia, and Yemen. Millions of Syrians are living in refugee camps in Jordan, Lebanon, and Turkey. Inter-ethnic and inter-religious strife plagues Myanmar and other parts of Asia. And in Latin America and the Caribbean, levels of crime and violence are alarmingly high, with some urban and rural areas controlled by criminal gangs or drug cartels.

“The trend toward insecurity is deeply concerning. This year, 39 of the 189 member countries of the World Bank Group – 39 of 189 – are experiencing open conflict situations or remain worryingly fragile. The number of people living in conflict areas nearly doubled between 2007 and 2020. Today, in the Middle East and North Africa, one in every five people lives in an area affected by conflict. This unraveling of security has brought a surge in the number of refugees, which more than doubled over the last decade to exceed 30 million refugees in 2020. The war in Ukraine has already displaced an additional 10 million people from their homes, pushing more than 4 million people – primarily women and children – into neighboring countries, most of them to Poland and Romania.

“We recognize that each of the ongoing crises hits the vulnerable the hardest, often women and girls. And all the while, we are still suffering the health, economic, and social setbacks of a global pandemic and economic shutdowns. Millions of lives have been lost and millions more are suffering amid the massive reversals in development that hit the poor particularly hard.

“Since the outbreak of COVID-19, violence against women and girls has intensified. Global indicators on food, nutrition, and health have worsened. And children lost more than a year of education due to school closures, with 1.6 billion children out of school globally at the peak of lockdowns, reversing a full decade of gains in human capital.

“Never have so many countries experienced a recession at once, suffering lost capital, jobs, and livelihoods. At the same time, inflation continues to accelerate, reducing the real incomes of households around the world, especially the poor. The extraordinary monetary and fiscal policies that advanced economies have been implementing to boost their demand, combined with supply constraints and disruptions, have fueled price increases and have worsened inequality around the globe. One measure that captures the growing concern of inflation and inequality is the stagnation in real median income across much of the world. Another measure is the likelihood that poverty increases will continue in 2022 as inflation, currency depreciation, and high food prices hit home.

“The war in Ukraine and its consequences are also creating sudden shortages of energy, fertilizer, and food, pitting people against each other and their governments. Even people who are physically distant from this conflict are feeling its impacts.

“Food price spikes hit everyone and are devastating for the poorest and most vulnerable. For every one percentage point increase in food prices, 10 million people are expected to fall into extreme poverty. The rich can afford suddenly expensive staples, but the poor cannot. Malnutrition is expected to grow, and its effects will be the hardest to reverse in children.

“Trade disruptions have already sent grain and commodity prices soaring. Wheat exports from Black Sea ports have been sharply curtailed. And intense drought in South America is reducing global food production. Global food commodity markets are large and well-established, and – after a lag – they tend to self-adjust to disruptions in production. However, additional factors are making the current food supply problems more acute – namely the supply of fertilizers, energy prices, and self-imposed food export restrictions.

“Fertilizer prices are dependent on natural gas prices, which have surged. As LNG is shipped to Europe, LNG shortages are occurring elsewhere, reducing fertilizer production, and disrupting the sowing season and harvest productivity. Russia and Belarus are both large fertilizer producers, adding materially to the problem.

“The financial repercussions of the energy shock are intertwined with the global community’s efforts on climate change. Russia has been an important source for the world’s energy, including oil, coal, and gas – the latter supplying Europe through a network of pipelines. I’ve been pleased to see Europe follow a path toward diversifying its energy mix away from Russia and considering LNG imports and nuclear power for electricity baseload, but these take time. The rapid addition of major new energy production in Europe and other parts of the world will be a necessary ingredient for global recovery and energy security in Europe.

“The World Bank Group strongly supports the integration of climate and development goals. This recognizes the urgency of growth and development at the core of our mission of alleviating poverty and boosting shared prosperity; and the global community’s pledges to slow the growth in human-linked greenhouse gas emissions. These pledges for global public goods will require hundreds of complex, multi-decade projects that reduce emissions and are funded by the global community. We are working to tackle these challenges through analytical work, including our Country Climate and Development Reports and our Infrastructure Sector Assessment Programs. We are pleased to support Poland’s efforts to increase energy efficiency and continue its transition away from coal.

“Weakening Economic Outlook

“On the economic front, trends are not encouraging. Prior to the war in Ukraine, the recovery in 2022 was already losing momentum due to rising inflation and lingering supply bottlenecks. While advanced economies were expected to return almost to their pre-pandemic growth rates in 2023, developing economies were lagging substantially behind.

“The war in Ukraine and the COVID-19 lockdowns in China are further reducing the recovery path. Of concern, the repercussions are worsening the inequality as the war affects commodity and financial markets, trade, and migration linkages, and investor and consumer confidence. Advanced economies with well-developed social protection systems are cushioning parts of their populations from the damage from inflation and trade blockages, but poorer countries have limited fiscal resources and weaker systems to support those in need. Currency depreciations and inflation are hitting the poor hard, causing fast increases in 2022 poverty rates. Adding to the burden, developing country debt has risen sharply to a 50-year high—at roughly 250 percent of government revenues. Debt vulnerabilities are particularly acute in low-income countries, where sixty percent are already experiencing or at high risk of debt distress.

“Most emerging market and developing economies are ill-prepared to face the coming debt shock. Exposures to financial sector risk are opaque at this point, but one measure, the cost of insuring against default in emerging markets, has reached its highest point since the onset of the pandemic.”

A few thoughts

While there has been improved cooperation among multilateral institutions in addressing some of the crises identified, including supporting Ukraine during this period of enormous challenge from Russia’s unprovoked war, solutions to some of the inflationary spikes appear more remote during the pendency of the war and are aggravated by China’s lockdown of areas of the country in pursuit of its zero-COVID policy.

It is clear that Europe, the United States and some of their close allies will be changing investment and trade flows to address the unacceptable dependence on countries which don’t support the global rule of law and respect for national sovereignty. There will likely be spillover effects for other countries unable or unwilling to distance themselves from the Russian Federation. It is hard to see such fragmentation ending even with the end of Russia’s war whenever that occurs.

The increase in food security concerns are at least partially addressable by joint action to keep markets open and not impose export restrictions and ensure funding for UN World Food Program purchases during a period of inflated food prices. While the WTO’s efforts during the COVID-19 pandemic have improved transparency on export and import actions on food and medicines, it is unclear what level of cooperation will occur from countries with a history of imposing export restraints on food during periods of rising food prices. As history shows, increased food insecurity often leads to increased social unrest, as was true in 2007-2008.

While the need to move from fossil fuel imports is apparent for European countries and hence can have positive effects on increased use of renewable energy sources, the current high prices for fossil fuels and the role of Russia in the global supply of such fuels has countries scrambling to increase production to address short-term demand needs. Such increased production of fossil fuels and reduced cooperation among many countries on some issues will likely hurt global efforts to address the existential issue of climate change.

Russia has reportedly started a new phase of its invasion of Ukraine in the east this week. See New York Times, Ukraine Live Updates: Russia Declares New Phase of War as Forces Clash in East, April 19, 2022, https://www.nytimes.com/live/2022/04/19/world/ukraine-russia-war-news. How long the conflict will go on is, of course, unknown. But the rest of 2022 is likely to be challenging for governments and people around the world addressing the fallout from the war and other crises.

Addressing Medical Waste as Part of the Global Response to the COVID-19 Pandemic

Terence P. Stewart · February 22, 2022 · medical waste · IMF, WHO, World Bank, WTO · No Comments

On February 1, 2022, the WHO released a report on the challenges posed by additional medical waste as the world responds to the COVID-19 pandemic. See World Health Organization, Global analysis of health care waste in the context of COVID-19, February 2022, https://www.who.int/publications/i/item/9789240039612

The WHO news release describes the issues around medical waste during the pandemic. WHO News Release, Tonnes of COVID-19 health care waste expose urgent need to improve waste management systems, 1 February 2022, https://www.who.int/news/item/01-02-2022-tonnes-of-covid-19-health-care-waste-expose-urgent-need-to-improve-waste-management-systems.

“Tens of thousands of tonnes of extra medical waste from the response to the COVID-19 pandemic has put tremendous strain on health care waste management systems around the world, threatening human and environmental health and exposing a dire need to improve waste management practices, according to a new WHO report.

“The WHO Global analysis of health care waste in the context of COVID-19: status, impacts and recommendations bases its estimates on the approximately 87,000 tonnes of personal protective equipment (PPE) that was procured between March 2020- November 2021 and shipped to support countries’ urgent COVID-19 response needs through a joint UN emergency initiative. Most of this equipment is expected to have ended up as waste.

“The authors note that this just provides an initial indication of the scale of the COVID-19 waste problem. It does not take into account any of the COVID-19 commodities procured outside of the initiative, nor waste generated by the public like disposable medical masks.

“They point out that over 140 million test kits, with a potential to generate 2,600 tonnes of non-infectious waste (mainly plastic) and 731,000 litres of chemical waste (equivalent to one-third of an Olympic-size swimming pool) have been shipped, while over 8 billion doses of vaccine have been administered globally producing 144,000 tonnes of additional waste in the form of syringes, needles, and safety boxes.

“As the UN and countries grappled with the immediate task of securing and quality-assuring supplies of PPE, less attention and resources were devoted to the safe and sustainable management of COVID-19 related health care waste.

“’It is absolutely vital to provide health workers with the right PPE, ‘ said Dr Michael Ryan, Executive Director, WHO Health Emergencies Programme. ‘But it is also vital to ensure that it can be used safely without impacting on the surrounding environment.’

“This means having effective management systems in place, including guidance for health workers on what to do with PPE and health commodities after they have been used.

“Today, 30% of healthcare facilities (60% in the least developed countries) are not equipped to handle existing waste loads, let alone the additional COVID-19 load. This potentially exposes health workers to needle stick injuries, burns and pathogenic microorganisms, while also impacting communities living near poorly managed landfills and waste disposal sites through contaminated air from burning waste, poor water quality or disease carrying pests.

“’COVID-19 has forced the world to reckon with the gaps and neglected aspects of the waste stream and how we produce, use and discard of our health care resources, from cradle to grave,’ said Dr Maria Neira, Director, Environment, Climate Change and Health at WHO.

“’Significant change at all levels, from the global to the hospital floor, in how we manage the health care waste stream is a basic requirement of climate-smart health care systems, which many countries committed to at the recent UN Climate Change Conference, and, of course, a healthy recovery from COVID-19 and preparedness for other health emergencies in the future.’

“The report lays out a set of recommendations for integrating better, safer, and more environmentally sustainable waste practices into the current COVID-19 response and future pandemic preparedness efforts and highlights stories from countries and organizations that have put into practice in the spirit of ‘building back better’.

“Recommendations include using eco-friendly packaging and shipping, safe and reusable PPE (e.g., gloves and medical masks), recyclable or biodegradable materials; investment in non-burn waste treatment technologies, such as autoclaves; reverse logistics to support centralized treatment and investments in the recycling sector to ensure materials, like plastics, can have a second life. (Emphasis added)

“The COVID-19 waste challenge and increasing urgency to address environmental sustainability offer an opportunity to strengthen systems to safely and sustainably reduce and manage health care waste. This can be through strong national policies and regulations, regular monitoring and reporting and increased accountability, behaviour change support and workforce development, and increased budgets and financing.

“’A systemic change in how health care manages its waste would include greater and systematic scrutiny and better procurement practices,’” said Dr Anne Woolridge, Chair of the Health Care Waste Working Group, International Solid Waste Association (ISWA).

“’There is growing appreciation that health investments must consider environmental and climate implications, as well as a greater awareness of co-benefits of action. For example, safe and rational use of PPE will not only reduce environmental harm from waste, it will also save money, reduce potential supply shortages and further support infection prevention by changing behaviours.’

“The analysis comes at a time when the health sector is under increasing pressure to reduce its carbon footprint and minimize the amount of waste being sent to landfill — in part because of the great concern about the proliferation of plastic waste and its impacts on water, food systems and human and ecosystem health.”

The importance of the report, which doesn’t account for the vast amount of medical waste from COVID in countries not procuring PPE and other products through the UN system, is reflected in a recent posting on the World Economic Forum’s webpage. See World Economic Forum, COVID-19 has caused a surge in medical waste. Here’s what needs to be done, February 17, 2022, https://www.weforum.org/agenda/2022/02/medical-waste-plastic-environment-covid/.

Role for Other Multilateral Organizations and Private Sector

While the WHO obviously has a central role in working with countries to help them improve their healthcare systems including best practices in medical waste disposal, it is clear that more can and should be done to address the current situation and minimize challenges going forward from other pandemics and everyday health care needs.

For example, the IMF, World Bank, WTO and WHO meet to jointly explore ways to improve vaccination and other health care responses to the COVID-19 pandemic. See MULTILATERAL LEADERS TASK FORCE ON COVID-19 VACCINES, THERAPEUTICS, AND DIAGNOSTICS, https://www.covid19taskforce.com/en/programs/task-force-on-covid-19-vaccines. Resources from the IMF and World Bank as well as from governments and the private sector are needed to improve in-country capabilities for medical waste handling. It is not clear that the four are working jointly on funding for improved medical waste treatment as part of the Multilateral Leaders Task Force. If not they should be. Such efforts should be happening now as resources are being spent to ramp up in-country vaccination capabilities so that additional vaccinations are coupled with proper medical waste handling. In addition, those institutions and some governments have been working to increase regional production of vaccines, but there has been no discussion of similar efforts on PPE or other items where local manufacture could reduce environmental and health challenges.

Similarly, the WTO has been exploring the trade response to the pandemic (and to future pandemics). Separately, there are several plurilateral negotiations on environmental issues, including one of plastics in the oceans. The WHO report raises the question of whether the WTO trade and health discussions need to consider what, if any, additional elements could be added to help Members address medical waste. Members should also be exploring whether the plurilaterals should be expanded to take on additional aspects of the medical waste challenge.

There is much that the private sector should be doing to find solutions to the problems of growing medical waste through redesign of products to use less plastic, increase reusability of PPE products and address other aspects of the WHO recommendations.

Time will tell whether the gaps in the health care system pertaining to medical waste are addressed meaningfully or not. Let’s hope this is an area where there will be global focus and coordination.

WTO-IMF COVID-19 Vaccine Trade Tracker provides useful information in analyzing vaccine equity

Terence P. Stewart · November 23, 2021 · COVID-19 vaccinations · Cameroon, China, European Union, IMF, India, Japan, Morocco, Republic of Korea, Russian Federation, South Africa, UNICEF, United States, WTO, Zimbabwe · No Comments

On November 22, 2021, the WTO and IMF announced and released their COVID-19 Vaccine Trade Tracker. See WTO News Release, WTO, IMF launch Vaccine Trade Tracker, 22 November 2021, https://www.wto.org/english/news_e/news21_e/covid_22nov21_e.htm. While the data on access to vaccines is not as granular as the UNICEF COVID Vaccine Dashboard, the new tracker provides data under six topics: summary, exports (options being by producing economy or by supply arrangement type), imports (options being by income group or by continent), total supply (options being by producing economy or by vaccine type), supply to continents (Africa, Asia, Europe, North America, Oceania, South America) and vaccination status (options being by income group and by continent). Data in the initial release are through October 31, 2021. Income groups are the World Bank’s groupings — Low income, lower-middle income, upper middle income and high income.

In recent posts I have noted that much of the discussion on vaccine equity focuses on access and affordability but doesn’t necessarily help understand widely different outcomes for countries or territories that are at the same stage of economic development. See November 22, 2021: Trade and Health at the WTO’s 12th Ministerial Conference, https://currentthoughtsontrade.com/2021/11/22/trade-and-health-at-the-wtos-12th-ministerial-conference/. The WTO-IMF Tracker doesn’t include the identification of countries/territories within income groups but rather reports on the entire grouping. The World Bank’s 2020 listing is the most recent. See World Bank, GNI per capita, Atlas method (current US$), https://data.worldbank.org/indicator/NY.GNP.PCAP.CD; November 15, 2021: The folly of self-selection as a developing country at the WTO, https://currentthoughtsontrade.com/2021/11/15/the-folly-of-self-selection-as-a-developing-country-at-the-wto/.

Of the listed producing countries involved in exports of COVID-19 vaccines all are WTO Members. The EU, USA, Japan and Republic of Korea are listed as high income countries by the World Bank though Korea has treated itself as a developing country at the WTO. China, the Russian Federation and South Africa are included as upper middle income countries by the World Bank based on per capita GNI, though both China and South Africa claim developing country status at the WTO. India is listed as a lower-middle income country by the World Bank and claims developing country status at the WTO. There is a small amount of exports from other countries not broken out by individual country n the WTO-IMF tracker.

On total supply (“Total supply contains both exported and domestically delivered doses), China is the largest producing country with a total supply of 4.0811 billion doses of which 1.3294 billion doses have been exported. The European Union is the second largest producer with a total supply of 1.7077 billion doses producers of which 876.5 million have been exported. India is the third largest producers with total supply of 1.3608 billion doses of which just 66.0 million doses have been exported. The United States is fourth with total supply of 941.1 million doses and exports of 300.8 million doses. Others have much smaller total supplies and exports.

The vast majority of exports have been through bilateral deals (77.5%). The second largest source of exports has been doses contracted via COVAX (8.1%). Because of several major problems COVAX experienced from suppliers — the largest being the shut down of exports from India for much of 2021 — COVAX has been unable to supply the large volume of vaccine doses in 2021 to low income and lower middle income countries that had been planned on. The third largest source of exports was donations via COVAX (7.5%), followed by direct donations from producing countries to receiving countries (6.1%) and supply via the African Vaccine Acquisition Trust (“AVAT”)(0.8%).

The vaccination status data (item six in the Tracker) is helpful in identifying regions with the greatest needs as well as the breakout by World Bank income level. However, because of the lack of granularity to the individual country or territory, the data don’t help understand the large differences between members in the same continent or in the same income grouping.

By continent, all continents except Africa have received more than 50 courses of doses per 100 people (with North America the highest at 81.4 and Europe at 76.2). Africa was just 11.2 courses per 100 people. All but Africa have more than 50% of the population with at least one dose administered. Africa was just 8.7%. And all but Africa have more than 40% of the population fully vaccinated. Africa was only 5.8%. Thus, there is a need to expand availability of vaccine doses to most African countries

When vaccination status is examined by income level, high income and upper middle income countries and territories have much larger vaccination rates than lower middle income and low income. On courses of vaccines per 100 people, high income countries were at 89.5, upper middle income countries averaged 74.8, lower middle income countries were at just 34.8 and low income countries were at just 7.0. Similar discrepancies exist on percent with at least one dose administered and percent fully vaccinated. The inability of COVAX to receive the volumes of doses contracted for in 2021 and the slowness of donations for richer countries are certainly core reasons for the differences in doses for lower middle income and low income countries.

Yet there are major discrepancies among countries or territories in the same continent or same income grouping. I identified a few in yesterday’s post. See November 22, 2021: Trade and Health at the WTO’s 12th Ministerial Conference, https://currentthoughtsontrade.com/2021/11/22/trade-and-health-at-the-wtos-12th-ministerial-conference/. For example, Morocco is classified as a lower middle income country by the WTO but had the highest level of administered vaccines/100 people in Africa (136.5 (assumed to be 68.25 courses of doses/100 people)) while South Africa, classified as an upper middle income country had a rate of administered vaccine doses less than 1/3 that of Morocco (41.4 (assumed to be 20.7 courses of doses/100 people). Similarly, two low income countries as classified by the World Bank have drastically different administered doses despite nearly identical per capita GNIs and both being countries in Africa. Specifically, Zimbabwe’s per capital GNI in 2020 was $1,090 and yet they had administered 42.3 COVID vaccine doses/100 people. Cameroon, with a per capita GNI in 2020 of $1,100, had COVID vaccines administered of only 2.4/100 people.

Conclusion

The WTO-IMF COVID-19 Vaccine Trade Tracker provides very useful information, although much is at a continent or income group level. It appears likely that the tracker will be updated only monthly. If not being considered, the designers of the new tracker should provide a link to a data base that provides the type of data shown in the aggregate for each country or territory. Such data would permit a better understanding of differences within continents and within income groups and potentially improve the ability to improve vaccine equity moving forward. It is also possible to update the tracker more frequently than once a month, though some charts, etc. are fine with monthly updates. .

COVAX delivers COVID-19 vaccines to 100th country; India surge in infections likely to reduce product availability for COVAX through May and likely longer

Terence P. Stewart · April 8, 2021 · COVID-19 vaccinations · CEPI, COVAX, GAVI, IMF, India, Serum Institute of India, UNICEF, WHO, World Bank, WTO · No Comments

Apress release from the WHO, Gavi, CEPI and UNICEF on the COVAX facility’s success in getting vaccines to 100 countries by April 8 is impressive news for the efforts of the WHO, GAVI, CEPI, UNICEF and their supporters to get vaccines to low- and middle-income countries as part of the effort to have vaccine distribution done equitably and affordably. See Press Relase from WHO, Gavi, CEPI, UNICEF, COVAX reaches over 100 economies, 42 days after first international delivery, April 8, 2021, https://www.gavi.org/news/media-room/covax-reaches-over-100-economies-42-days-after-first-international-delivery#:~:text=The%20milestone%20comes%2042%20days,Ghana%20on%20February%2024th.&text=Of%20the%20over%20100%20economies,Advance%20Market%20Commitment%20(AMC). The press release is embedded below.

PDF Embedder requires a url attribute COVAX-reaches-over-100-economies-42-days-after-first-international-delivery-_-Gavi-the-Vaccine-Alliance

While the release indicates that there will be delays in deliveries of vaccines in March and April because of increased COVID-19 cases in India, developments in India could mean an even greater delay in supplies than announced in March. For example, the major supplier of vaccines to COVAX in the first half of 2021 is the Serum Institute of India (“SII”) which is licensed by AstraZeneca to produce that vaccine in India for distribution in large part to COVAX. Yesterday, the president of SII indicated that export shipments could resume in June depending on cases levels in India. See Financial Times, India to restart Covid vaccine exports in June if local cases fall, April 7, 2021, https://www.ft.com/content/fcdffb8f-f86e-4bd9-adec-20256aeb0a07. It doesn’t appear that SII has notified COVAX of a further delay past April, but a June resumption, if it occurs, suggests that delays will continue through May at a minimum.

The situation for SII is complicated by a need for expanded capacity. It has sought $400 million from the Indian government to ramp up production from 71 million to 100 million doses per month by May. See Fierce Pharma, ‘Very stressed’ Serum Institute asks government for $400M vaccine production boost, April 8, 2021, https://www.fiercepharma.com/manufacturing/very-stressed-serum-institute-india-asks-government-for-vaccine-production-boost.

Moreover, the refusal of SII to export doses to the United Kingdom, to COFAX and others has become the basis for a legal notice from AstraZeneca. See Times of India, Covid-19: AstraZeneca sends legal notice to SII over delays in vaccine supply, April 8, 2021, https://timesofindia.indiatimes.com/india/astrazeneca-sends-legal-notice-to-sii-over-delays-in-vaccine-supply/articleshow/81960902.cms. SII is also finding itself refunding moneys paid by countries who are not getting supplies. See Reuters, Serum Institute refunds S. Africa for undelivered AstraZeneca doses, April 8, 2021, https://www.reuters.com/article/us-health-coronavirus-safrica/serum-institute-refunds-south-africa-for-undelivered-astrazeneca-doses-idUSKBN2BV1TI.

While COVAX is looking to expand sources of vaccines, SII is the major source through June. Professor Simon Evenett has put out a one page analysis of the implications for supply to COVAX from SII if the resumption of exports is premised on India fully vaccinating all those willing to be vaccinated for whom the government of India has opened up vaccinations. While SII has not stated that resumption of exports is tied to full vaccination of Indians who are 45 years or older, Prof. Evenett’s paper is an interesting analysis of how long a delay could occur in terms of SII becoming a major exporter again. His paper entitled “Vaccine Maths 2: Will India start exporting COVID-19 vaccines again in June 2021?” is embedded below.

Vaccine_Maths_2.pd_

Conclusion

With the spread of the new variants of COVID-19 that have higher rates of transmission and higher rates of serious infection, many countries find themselves facing increased numbers of cases and increased hospitalizations and deaths even as vaccine supplies are increasing and vaccination roll outs starting in many countries. There is a lot of attention within multilateral organizations such as the World Bank, IMF and WTO and by a number of countries on the needs for increased production and distribution to all countries. See, e.g., April 6, 2021, IMF April World Economic Outlook, IMF and World Bank Spring Meetings and U.S. efforts on global access to vaccines, https://currentthoughtsontrade.com/2021/04/06/imf-april-world-economic-outlook-imf-and-world-bank-spring-meetings-and-u-s-efforts-on-global-access-to-vaccines/. COVAX is an important part of the solution but it will need more funding and greater diversity of suppliers to meets its role in the equitable and affordable access to vaccines in 2021 and 2022.

IMF April World Economic Outlook, IMF and World Bank Spring Meetings and U.S. efforts on global access to vaccines

Terence P. Stewart · April 6, 2021 · COVID-19 vaccinations · Australia, IMF, India, Japan, U.S. Secretary of State Antony Blinken, United States, World Bank, World Economic Outlook · No Comments

The IMF released today its April 2021 World Economic Outlook, increasing projected global growth in 2021 and 2022 from its earlier projections. See IMF, World Economic Outlook, Managing Divergent Recoveries, April 2021, https://www.imf.org/en/Publications/WEO/Issues/2021/03/23/world-economic-outlook-april-2021. Global contraction was less severe than previously thought in 2020 and the rebound is larger though there remains significant uncertainty.

“Global prospects remain highly uncertain one year into the pandemic. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic-induced disruptions and the extent of policy support. The outlook depends not just on the outcome of the battle between the virus and vaccines—it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis.

“Global growth is projected at 6 percent in 2021, moderating to 4.4 percent in 2022. The projections for 2021 and 2022 are stronger than in the October 2020 WEO. The upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility. High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions.”

The following tables from the IMF webpage taken from the new report show first the global, advanced economies and developing economy outlook for 2020, 2021, 2022 and then for various major countries and regions for the same periods.

Much has been written about the need for debt relief and greater access to vaccines for many low-income countries to help them get through the pandemic and back on track for economic expansion. The IMFBlog from April 5, 2021 provides an overview of the serious challenges faced by low income countries and the potential sources of financial support available through the IMF if supported by member countries. See IMFBlog, Funding the Recovery of Low-income Countries After COVID, April 5, 2021, https://blogs.imf.org/2021/04/05/funding-the-recovery-of-low-income-countries-after-covid/.

“Several factors hamper the economic recovery of low-income countries. First, they face uneven access to vaccines. Most of these countries rely almost entirely on the multilateral COVAX facility—a global initiative aimed at equitable access to vaccines led by a consortium of international organizations. COVAX is currently set to procure vaccines for just 20 percent of the population in low-income countries. Second, low-income countries have had limited policy space to respond to the crisis—in particular, they have lacked the means for extra spending * * *.

“Third, pre-existing vulnerabilities, including high levels of public debt in many low-income countries, and weak, sometimes negative, total factor productivity performance in some low-income countries continue to act as a drag on growth.”

The blog post reviews estimated financial needs over the next five years. The estimated needs are $200 billion to respond to the COVID-19 pandemic (including adequate vaccinations), an additional $250 billion to speed convergence with advanced economies, and an additional $100 billion if various risks materialized. Potentially $550 billion — obviously a huge number.

The blog identifies various potential sources of funds to address these needs that can be available through the IMF.

“- Expanding access to concessional resources under the Poverty Reduction and Growth Trust, including extending access to emergency financing. From March 2020 to March 2021, about $13 billion has been approved to more than 50 low-income countries. The IMF is also currently reviewing its lending framework to low-income countries, beyond the temporary increase in access limits.

“- Proposal for a new allocation of Special Drawing Rights . Support is building among the IMF’s membership for a possible SDR allocation of $650 billion. This would help address the long-term global need for reserve assets, and would provide a substantial liquidity boost to all members.

“- Debt service relief through the Catastrophe Containment and Relief Trust to 29 eligible countries. The recently-approved third tranche covering the period April-October 2021 brings total debt service relief up to $740 million since April 2020. Such relief provides space for poor countries to scale up spending on priority areas during the pandemic.

“- Supporting a further extension of the G-20 Debt Service Suspension Initiative (DSSI) until end-December 2021. The DSSI delivered US$5.7 billion in debt service relief for 43 countries in 2020 and is expected to deliver up to US$7.3 billion of additional debt service suspension through June 2021 for 45 countries.

“The needs of the poorest countries over the next five years are acute. But they are not out of reach. A strong, coordinated, comprehensive package is needed. This will secure a rapid recovery and transition to a green, digital, and inclusive growth that will accelerate convergence of low-income countries to their advanced economy counterparts.”

The IMF Spring meeting this week is taking up various issues designed to ensure assistance to the world’s low income countries. See, e.g., IMF, PRESS RELEASE NO. 21/99, IMF Executive Board Extends Debt Service Relief for 28 Eligible Low-Income Countries through October 15, 2021, April 5, 2021, https://www.imf.org/en/News/Articles/2021/04/05/pr2199-imf-executive-board-extends-debt-service-relief-28-eligible-lics-october-15-2021.

The Rockefeller Foundation released a paper recently arguing that funding from the Special Drawing Rights could be used to help procure vaccines for low- and middle-income countries to enable 70% vaccination rates by the end of 2022. See PR Newswire, The Rockefeller Foundation Releases New Financing Roadmap to End Pandemic by End of 2022, April 6, 2021, https://www.prnewswire.com/news-releases/the-rockefeller-foundation-releases-new-financing-roadmap-to-end-pandemic-by-end-of-2022-301262501.html; Rockefeller Foundation, One for All: An Action Plan for Financing Global Vaccination and Sustainable Growth, https://www.rockefellerfoundation.org/wp-content/uploads/2021/04/One-for-All-An-Action-Plan-for-Financing-Global-Vaccination-and-Sustainable-Growth-Final.pdf.

Other multilateral organizations such as the World Bank have been actively involved helping developing countries including using billions for vaccine procurement. See World Bank Group, WBG Vaccine Announcement – Key Facts, March 30, 2021, https://www.worldbank.org/en/news/factsheet/2020/10/15/world-bank-group-vaccine-announcement—key-facts

“COVID-19 vaccines, alongside widespread testing, improved treatment and strong health systems are critical to save lives and strengthen the global economic recovery. To provide relief for vulnerable populations, low- and middle-income countries need fair, broad, and fast access to effective and safe vaccines.

“That’s why the World Bank (WB) is building on its initial COVID-19 response with $12 billion to help poor countries purchase and distribute vaccines, tests, and treatments. The first WB-financed operation to support vaccine rollout was approved in January 2021.

“By March 31, 2021, the WB had already committed $1.6 billion in vaccine financing in 10 countries including Afghanistan, Cabo Verde, Bangladesh, Lebanon, Mongolia, Nepal, Philippines, Tajikistan, and Tunisia. More than 40 additional projects are in the pipeline and will be approved in the coming weeks and months.”

The World Banks’s Spring meeting is also occurring this week and addressing the COVID-19 pandemic remains a critical part of the World Bank’s agenda.

U.S. announced larger role in global vaccine rollout

President Biden has had as his first priority to tackle the COVID-19 pandemic in the United States while committing to greater involvement in multilateral organizations. He has rejoined the World Health Organization, contributed $2 billion to the COVAX facility to obtain vaccines for low- and middle-income countries, with an additional $2 billion to be contributed as other countries fulfill their pledges, agreed to a fund raising event for COVAX later in April, loaned four million vaccine doses to Canada (1.5 million) and Mexico (2.5 million) and agreed with Japan, India and Australia to produce one billion doses of a vaccine (2021-2022) in India with funding from the US and Japan and distribution by Australia to countries in the Indo-Pacific region.

On April 5, 2021, U.S. Secretary of State Antony Blinken announced the Biden Administration’s intention to be more actively involved internationally as it gets the U.S. population vaccinated. See U.S. Department of State, Secretary Antony J. Blinken Remarks to the Press on the COVID Response, April 5, 2021, https://www.state.gov/secretary-antony-j-blinken-remarks-to-the-press-on-the-covid-response/. The portion of Secretary Blinken’s remarks dealing with greater international engagement and the appointment of the U.S. coordinator for global COVID response and health security is copied below.

“There’s another major element to stopping COVID, and that’s what we’re here to talk about today.

“This pandemic won’t end at home until it ends worldwide.

“And I want to spend a minute on this, because it’s critical to understand. Even if we vaccinate all 332 million people in the United States tomorrow, we would still not be fully safe from the virus, not while it’s still replicating around the world and turning into new variants that could easily come here and spread across our communities again. And not if we want to fully reopen our economy or start traveling again. Plus, if other countries’ economies aren’t rebounding because they’re still afflicted with COVID, that’ll hurt our recovery too.

“The world has to come together to bring the COVID pandemic to an end everywhere. And for that to happen, the United States must act and we must lead.

“There is no country on Earth that can do what we can do, both in terms of developing breakthrough vaccines and bringing governments, businesses, and international institutions together to organize the massive, sustained public health effort it’ll take to fully end the pandemic. This will be an unprecedented global operation, involving logistics, financing, supply chain management, manufacturing, and coordinating with community health workers who handle the vital last mile of health care delivery. All of that will take intensive diplomacy.

“The world has never done anything quite like this before. This is a moment that calls for American leadership.

“Now, the Biden-Harris administration’s main focus to date has been to vaccinate Americans – to slow and ultimately stop COVID here at home. We at the State Department have been focused on vaccinating our workforce in the United States and in embassies and consulates around the world. That’s been the right call. We serve the American people first and foremost. Plus, we can’t forget that the United States has had the highest number of COVID cases of any country in the world by a significant margin. So stopping the spread here has been urgently needed for our people and for the world. We have a duty to other countries to get the virus under control here in the United States.

“But soon, the United States will need to step up our work and rise to the occasion worldwide, because again, only by stopping COVID globally will Americans be safe for the long term.

“Moreover, we want to rise to the occasion for the world. By helping bring to a close one of the deadliest pandemics in human history, we can show the world once again what American leadership and American ingenuity can do. Let’s make that the story of the end of COVID-19.

“We’ve already taken some important steps.

“On day one of the administration, we rejoined the World Health Organization. By being at the table, we can push for reforms so that we can prevent, detect, and rapidly respond to the next biological threat.

“Congress recently provided more than $11 billion for America’s global COVID response, which we’ll use in several ways, including to save lives by supporting broad and equitable vaccine access; providing aid to mitigate secondary impacts of COVID, like hunger; and helping countries boost their pandemic preparedness.

“I’d note that this builds on a long tradition of American leadership. The United States is the world’s largest donor to global health by far, including through international efforts like the Global Fund and the World Health Organization – and through our own outstanding global health programs, like PEPFAR, which has helped bring the world to the cusp of the first AIDS-free generation.

“We’ve also made a $2 billion donation to the COVAX program, which will supply COVID vaccines to low-income and middle-income countries. We’ve pledged another $2 billion that we’ll provide as other countries fulfill their own pledges.

“We’ve already loaned vaccines to our closest neighbors, Mexico and Canada.

“And we’ll work with global partners on manufacturing and supplies to ensure there will be enough vaccine for everyone, everywhere.

“As we get more confident in our vaccine supply here at home, we are exploring options to share more with other countries going forward.

“We believe that we’ll be in a position to do much more on this front.

“I know that many countries are asking for the United States to do more, some with growing desperation because of the scope and scale of their COVID emergencies. We hear you. And I promise, we’re moving as fast as possible.

“We’ll be guided every step by core values.

“We won’t trade shots in arms for political favors. This is about saving lives.

“We’ll treat our partner countries with respect; we won’t overpromise and underdeliver.

“We’ll maintain high standards for the vaccines that we help to bring to others, only distributing those proven to be safe and effective.

“We’ll insist on an approach built on equity. COVID has already come down hard on vulnerable and marginalized people. We cannot allow our COVID response to end up making racial and gender inequality worse.

“We’ll embrace partnership, sharing the burden and combining strengths. The collaboration we formed a few weeks ago with the Quad countries – India, Japan, Australia – is a good example. Together, we’re increasing the world’s manufacturing capacity so we can get more shots out the door and into people’s arms as fast as possible.

“And by the way, one of the reasons we work through multilateral collaborations where possible is because they often share and defend these same values. For example, the COVAX initiative is designed explicitly to ensure that low- and middle-income countries can also get vaccines, because it’s only through broad and equitable vaccination that we’ll end the pandemic.

“Finally, we’ll address the current emergency while also taking the long view. We can’t just end this pandemic. We must also leave our country and the world better prepared for the next one.

“To do that, we’ll work with partners to reform and strengthen the institutions and systems that safeguard global health security. That will require countries to commit to transparency, information sharing, access for international experts in real time. We’ll need a sustainable approach to financing, surge capacity, and accountability, so all countries can act quickly to stem the next outbreak. And we’ll keep pushing for a complete and transparent investigation into the origins of this epidemic, to learn what happened – so it doesn’t happen again.

“All told, this work is a key piece of President Biden’s ‘Build Back Better’ agenda. We’ve got to make sure that we can better detect, prevent, prepare for, and respond to future pandemics and other biological threats. Otherwise, we’ll be badly letting ourselves and future generations down.

“This is a pivotal moment – a time for us to think big and act boldly. And the United States will rise to the challenge.

“I’m here today with a remarkable leader who will help us do just that.

“Gayle Smith was the administrator of USAID for President Obama, and served on the National Security Council for both President Obama and President Clinton, where we first got to know each other and worked together. She has deep experience in responding to public health threats, having helped lead the U.S. response to the Ebola crisis in 2014, having worked for years on the global fights against malaria, tuberculosis, HIV/AIDS. She is joining us from her most recent role as president and CEO of the ONE Campaign, which fights extreme poverty and preventable disease, primarily in Africa.

“She’s tested. She’s highly respected. She will hit the ground running. And I can say from having worked with Gayle and admired her for years that no one will work harder, faster, or more effectively to get us to the finish line.

I”’m grateful she’s agreed to serve as the coordinator for global COVID response and health security. Gayle Smith, the floor is yours. Thank you for doing this.

“MS SMITH: Thank you, Mr. Secretary. It’s a pleasure to be able to work with you again, and to call you Mr. Secretary.

“I’d also like to thank my friends at the ONE Campaign for making this possible. And I look forward to working with the men and women of the department and across the federal government, including because I know what you can do.

“I want to thank in particular some really smart scientists, President Biden, and the staff and volunteers at Howard University, where tomorrow I will get my second dose of the COVID vaccine.

“That vaccine is good for the body, but it’s also good for the mind and the soul, because it inspires hope in the future. And our job is to shape that future.

“I fought some viruses in the past, and I’ve learned two lessons. The first is that if the virus is moving faster than we are, it’s winning. The second is that with unity of purpose, science, vigilance, and leadership, we can outpace any virus.

“America’s done it before. Eighteen years ago, a Republican president launched a bold initiative to take on the HIV/AIDS epidemic. A Democratic president went on to expand that mission in scope. In 2014, the Obama-Biden administration, with the strong and generous support of Congress, defeated the world’s first Ebola epidemic.

“Our challenges now are two: first, to shorten the lifespan of a borderless pandemic that is destroying lives and livelihoods all over the world, and the second is to ensure that we can prevent, detect, and respond to those future global health threats we know are coming.

“American leadership is desperately needed, and I’m extremely confident we can rise to the occasion. I’m honored to be here, and thank you very, very much.”

Conclusion

This is an important week with both the IMF and World Bank Spring meetings and important agenda items on the continued global response to the pandemic and helping countries build back better. The IMF April World Economic Outlook has good news about the direction of global activity although the pace of recoveries will vary significantly among countries and regions. While global production and distribution of COVID-19 vaccines has ramped up enormously in the few months that vaccines have been approved and while there are many additional potential vaccines under development or in trials, the early months have seen some production challenges and distribution skewed to a handful of countries. Many of those countries with the most vaccine doses (U.S., UK, EU, India) have been countries or regions with many of the largest number of infections and deaths. Even so, the effort at equitable and affordable access to all needs additional work.

An article in the New York Times reviews an exciting potential development of a low-cost, easy to produce vaccine that could dramatically expand the ability of developing countries to produce their own vaccines. See New York Times, Researchers Are Hatching a Low-Cost Coronavirus Vaccine , April 5, 2021, https://www.nytimes.com/2021/04/05/health/hexapro-mclellan-vaccine.html (“A new vaccine for Covid-19 that is entering clinical trials in Brazil, Mexico, Thailand and Vietnam could change how the world fights the pandemic. The vaccine, called NVD-HXP-S, is the first in clinical trials to use a new molecular design that is widely expected to create more potent antibodies than the current generation of vaccines. And the new vaccine could be far easier to make.
Existing vaccines from companies like Pfizer and Johnson & Johnson must be produced in specialized factories using hard-to-acquire ingredients. In contrast, the new vaccine can be mass-produced in chicken eggs — the same eggs that produce billions of influenza vaccines every year in factories around the world.”).

Production is ramping up for the various vaccines that have been approved in various countries. Producers continue to explore adding capacity or licensing production to other producers. Governments – like the United States, Japan, India and Australia – are finding creative ways for nations to work together to build up additional capacity to reach countries with needs. COVAX has proven to be an important vehicle for distributing vaccines to low- and middle-income countries. As capacities expand and additional funding is available, COVAX will continue to be a critical part of the solution.

The IMF and World Bank have the ability to address many of the challenges facing developing countries with the support of its member governments. Hopefully, this week’s meetings will make a difference. And individual countries can and are doing more. Secretary Blinken’s remarks show the U.S. will be increasing its role and working with others to ensure global success. For a world fatigued from the pandemic, a path to resolution is needed now. Hopefully, we are close.

COVID-19 Trade and Economic Fallout — Are current projections too optimistic?

Terence P. Stewart · June 2, 2020 · COVID-19, United States, World Health Organization · Brazil, Bureau of Economic Analysis, Chile, Colombia, Congressional Budget Office, COVID-19, France, IMF, India, Italy, Mexico, Peru, United States, World Health Organization · No Comments

The COVID-19 pandemic is not simply a global health crisis but also a global economic crisis of unprecedented proportions.

The WTO has projected that global trade will decline between 13 and 32 percent in 2020 before rebounding in 2021. https://www.wto.org/english/news_e/pres20_e/pr855_e.htm.

The IMF in its April 2020 update of the global economy modified its projection to show global GDP contraction of 3.0% for 2020 with a 6.1% contraction by advanced economies (U.S., -5.9%; Euro Area, -7.9%; Japan, -5.2) and a 1.0% contraction for emerging markets and developing economies. https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020.

Developments in global trade and the national economy for the United States and the rising severity of the pandemic in some of the emerging and developing countries will likely cause future downward revisions to the global trade and economic fallout occurring in 2020 and reemphasize the importance of global cooperation both in responding to the pandemic but also in posturing the world for an economic recovery in the second half of 2020 and beyond.

United States data through April as an example

Gross domestic product in the United States declined 5.0% in the first quarter of 2020 based on a May 28, 2020 second estimate provided U.S. Department of Commerce’s Bureau of Economic Analysis. https://www.bea.gov/sites/default/files/2020-05/gdp1q20_2nd_0.pdf.

With more than 40 million people filing for unemployment benefits between mid-March and the end of May, the projection for second quarter GDP from at least one source on June 1, 2020 is an extraordinary contraction of 52.8%. See https://www.frbatlanta.org/cqer/research/gdpnow. This compares to the Congressional Budget Office’s projection of a 39.6% decline in the second quarter. https://www.cbo.gov/publication/56335. The CBO estimate uses a 3.5% decline in GDP for the first quarter and an annual projected decline of 5.6% for 2020.

With the current first quarter data GDP contraction in the U.S. at 5.0% and the most recent data from a model similar to that used by the Bureau of Economic Analysis projecting a 52.8% contraction in the second quarter, it is highly likely that the U.S. contraction in 2020 will exceed the 5.9% projected in the April IMF data.

Indeed, with the number of bankruptcies being reported in the U.S. and the large number of small and medium sized companies that may not be able to return to operation as reopening occurs, the economic rebound may not be as strong as current projections estimate either. The continued large number of new cases in the United States may be a contributing cause as some states either delay the speed of reopening or face larger resurgence of cases once reopening occurs because of the continued high level of COVID-19 in the population.

While the number of cases in the United States has at least stabilized and has been trending down, the rate of decline is far lower than that experienced in western Europe. For example, the United States continues to have the largest number of new confirmed cases of any country in the world, many weeks after the U.S. peak. Indeed in today’s European Centre for Disease Prevention and Control report on the COVID-19 situation update worldwide, as of 2 June 2020, the U.S. has 302,679 cases reported in the last fourteen days of the continuing to grow global total of 1,477,362 new cases in the last fourteen days. European countries have relatively few (7,973 for Spain; 7,311 for Italy, 9,188 for France and 6,818 for Germany). https://www.ecdc.europa.eu/en/geographical-distribution-2019-ncov-cases. In a prior post, data were shown for various countries over the period December 31, 2019 – May 24, 2020. Most European countries show reductions from their peak two week period of 80-90% while the United States has shown declines of only 23.5% through May 24 (slightly more through June 2, 26.0%). See COVID-19 – new hot spots amidst continued growing number of confirmed cases, https://currentthoughtsontrade.com/2020/05/25/covid-19-new-hotspots-amidst-continued-growing-number-of-confirmed-cases/. To the extent that IMF projections are based on infection rates that decline more rapidly than the actual U.S. experience with COVID-19, that would be another reason to believe the IMF projected contractions for the U.S. are too low.

On the trade front, the United States was doing well until mid-March. But the COVID-19 challenges that resulted in government actions led to 1st quarter 2020 exports from the U.S. of goods being down 1.2%, services exports down 21.5% for a total contraction of U.S. exports of 6.7%. U.S. imports of goods were down 11.5%, led by contraction of imports from China due to various additional duties imposed on Chinese goods. U.S. imports of services were down 29.9% for total imports being down 15.5%. See Bureau of Economic Analysis, News Release BEA 20-23, May 28, 2020 at 7, https://www.bea.gov/news/2020/gross-domestic-product-1st-quarter-2020-second-estimate-corporate-profits-1st-quarter.

The U.S. Department of Commerce, U.S. Census Bureau puts out a “Monthly Advance Economic Indicators Report”. The April 2020 report was released on May 29th and showed estimated data for imports and exports of goods (seasonally adjusted). April exports for the U.S. were down 29.9% with individual sectors being down 5.3% (food, feeds and beverages) to 70.8% (automotive vehicles). Similarly, U.S. imports were down 20.6% for April with sectors varying from being down 5.6% (foods, feeds and beverages) to 57.0% (automotive vehicles). https://www.census.gov/econ/indicators/advance_report.pdf.

Thus, U.S. trade contractions in April suggest that the range put forward by the WTO (13-32% for the year) is probably the correct range.

Rising Number of COVID-19 cases in South America and in India

The IMF revised 2020 projections from April likely understate the negative effects that emerging and developing countries are experiencing. Specifically, Latin America and the Caribbean are seeing major outbreaks of COVID-19 cases with the peak not yet reached in a number of important countries like Brazil, Peru, Chile and Colombia and also in Mexico. Depending on developments in these major countries and the spread in others, the likely economic contraction in the region could be significantly higher than the 5.2% contained in the April 2020 projections by the IMF. Brazil was estimated to experience a GDP contraction of 5.3% by the IMF, but recent estimates show a steadily growing projected contraction, latest figures showing 6.25%. See https://www.statista.com/statistics/1105065/impact-coronavirus-gdp-brazil/. With the COVID-19 cases still growing in Brazil, the contraction in GDP for 2020 will likely continue to worsen.

Similarly, India was projected to have GDP growth of 1.9% in 2020. The country’s challenges with COVID-19 cases are just starting with the current total number of confirmed cases at just under 200,000 but with nearly half of the cases reported in the last fourteen days (97,567 of 198,706). Indeed, some recent projections by Oxford Economics now have India’s GDP contracting in 2020. See https://www.icis.com/explore/resources/news/2020/06/01/10513907/india-gdp-growth-slows-to-4-2-lockdown-stays-at-manufacturing-hubs.

Other countries are also seeing increasing case numbers and the global totals of new cases have not peaked as yet which likely mean greater numbers of cases than most models have anticipated. If so global contraction could be significantly worse than the April estimates of the IMF.

High national debt levels are growing higher

The collapse of economic activity even for a few months is reducing tax revenues, increasing government spending in many jurisdictions and worsening national debt levels. For example, in the United States the Congressional Budget Office blog from April 24 estimated that the U.S. budget deficit in 2020 and 2021 will be $2.7 billion and $1.1 billion higher than earlier estimates and that federal debt held by the public is likely to grow from 79% of GDP in 2019 to 101% of GDP in 2020 and 108% of GDP in 2021. https://www.cbo.gov/publication/56335. The actual deficits and federal debt are likely to be significantly higher as the CBO estimates are based on forecasts for GDP contraction that already understates the severity experienced through the first quarter and assumes no further federal assistance will be required to pull the economy out of the steep contraction being experienced in the second quarter. As governors across the country have made clear, the serious budget shortfalls being experienced by the states because of closed businesses, reduced revenues and increased expenditures are not sustainable. If these 2020 shortfalls are not addressed through federal legislation, the outcome will be large reductions in state and local services and massive layoffs of state and municipal employees including police, fire, health care and teachers. So either the budget shortfall of the federal government is understated because of additional stimulus funding needs or the expected recovery of the economy (and hence government revenues) is overstated because of the challenges for many states.

Virtually every country is facing budget challenges as they attempt to address the COVID-19 pandemic and its economic fallout. See, e.g., articles on growing budget deficits for France, Italy, Brazil and India; https://www.reuters.com/article/us-health-coronavirus-France-budget/france-more-than-doubles-crisis-package-cost-to-100-billion-euros-idUSKCN21R2J2; https://www.nytimes.com/reuters/2020/05/22/world/americas/22reuters-brazil-economy.html; https://www.reuters.com/article/us-health-coronavirus-italy-budget-exclu/exclusive-italy-sees-2020-budget-deficit-near-10-of-gdp-source-idUSKBN21Y2U9; https://economictimes.indiatimes.com/news/economy/indicators/indias-fiscal-deficit-may-shoot-to-6-2-of-gdp-in-fy21-fitch-olutions/articleshow/74928660.cms?from=mdr#:~:text=NEW%20DELHI%3A%20India’s%20fiscal%20deficit,Fitch%20Solutions%20said%20on%20Wednesday.

Budget shortfalls, the need to borrow more money and the pressure to reduce national, regional and local services all affect the ability of nations to contribute to international institutions, to provide financial assistance to the poorest countries and to facilitate short-, medium- and longer-term growth.

Conclusion

The global COVID-19 pandemic is creating economic havoc in addition to the heavy health toll on countries around the world. A global challenge of this magnitude hasn’t been faced since World War II. The projections that have been made by multilateral and national organizations have been for huge contractions in world trade and in global economic growth. Unfortunately, the estimates at least on global GDP contraction are likely too optimistic both in terms of the severity of the second quarter 2020 contraction and the anticipated level of second half 2020 recovery. Moreover, there is likely to be significantly more national stimulus programs needed to help economies recover increasing already huge national debts for many countries and the likely greater need for trade financing and debt support for many developing and least developed countries because of the severity of the global trade and GDP contraction.

The challenges being faced affect the health and livelihood of billions of people but are occurring at a time of reduced trust in multilateral institutions, increased trade frictions between major nations and groups of nations and a lack of strong leadership within and among nations.

How severe the damage to the world turns out to be from the pandemic will depend on –

(1) whether countries come together to ensure open markets;

(2) whether countries both coordinate information about and promote expanded production of essential medical goods to ensure adequate and equitable availability to all at affordable prices,

(3) whether countries support efforts of both public and private players on the development of effective vaccines and therapeutics and facilitate the sharing of information while ensuring equitable availability to all at affordable prices where breakthroughs occur,

(4) whether countries support multilateral organizations’ efforts and individually support the bolstering of health care infrastructure of least developed countries and some developing countries where COVID-19 cases could easily overwhelm internal capabilities;

(5) whether countries cooperate for a strong global recovery by pursuing stimulus programs that don’t distort markets and create other challenges to global participation, and by providing multilateral organizations with the resources to address debt and trade financing needs of the poorest among us.

There are some efforts to address each of the five items above although the U.S. announced withdrawal from the World Health Organization handicaps efforts reviewed in (3).

More needs to be done and could be done with greater cooperation among the top 50 countries in the world. However, we may be at the maximum of what is the art of the possible at the moment. For the 7.8 billion people living on earth in 2020, let us hope that more is possible quickly.

Transparency on trade actions surrounding the COVID-19 pandemic

Terence P. Stewart · April 15, 2020 · Uncategorized · China, COVID-19, European Union, IMF, Singapore, South Korea, transparency, United States, WHO, World Trade Organization · No Comments

Global confirmed cases of COVID-19 will reach two million today, April 15, with the actual number likely much higher and with deaths over 125,000. Nearly every country on earth has at least some confirmed cases.

Different countries and territories are at different stages in dealing with COVID-19 infections, with China, South Korea and Singapore seemingly well past the worst of the first wave of infections. Countries in Europe and various states within the United States are also seeing the rate of infection flatten or even decline following weeks of stay-at-home orders, social distancing and drastic changes to daily life. Hot spots are shifting both within countries (e.g., the United States) and to different countries.

The economic cost of closing down portions of economies has been unprecedented with the IMF characterizing the hit on global GDP to be the worst since the great depression of the 1930s. https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020. To avoid even worse economic fallout, countries are pouring huge sums into their economies to prevent massive bankruptcies, limit unemployment and provide expanded social safety nets. Press reports suggest at least $8 trillion has been committed with more being considered in various countries.

For countries who are witnessing likely GDP reductions of as much as 35% in one of the first two quarters of 2020, governments are mapping out scenarios for reopening closed portions of their economies if they have been recent epicenters or engaged in phased reopening if apparently largely past the first phase. Such planning is occurring at the subnational, national or trading bloc level (EU) with little apparent effort to coordinate efforts around the world. Where plans are being discussed publicly, common elements appear to be expanded and harmonized testing (both for the infection and for antibodies), ability to do tracing of individuals who have been in contact with individuals found to have the virus to secure quarantining, capacity of the healthcare system to handle cases, and adequacy of supplies. Concerns about privacy interests are also part of the discussion/needs for democracies. See, e.g., European Commission roadmap released April 15, 2020, https://ec.europa.eu/commission/presscorner/detail/en/ip_20_652; https://ec.europa.eu/info/sites/info/files/communication_-_a_european_roadmap_to_lifting_coronavirus_containment_measures_0.pdf

For most of the developing and least developed countries, the pandemic has yet to show its full force. Many of these countries have inadequate healthcare infrastructure and don’t have the internal manufacturing capabilities or financial resources to handle the pandemic without assistance if they become an epicenter.

The world has seen limited actual coordination of efforts by major players despite commitments by G20 countries although funding for multilateral institutions like the IMF have been increased to facilitate expanded efforts for the weakest countries. There also seems to be an exchange of information and some cooperation in the research efforts underway to find a vaccine.

Many countries who have been hard hit by the pandemic were slow to recognize the extent of the challenge and often slow in implementing comprehensive actions which has exacerbated the challenges, the loss of life and the harm to their economies. This has led to some lack of transparency at least in the early days and perhaps a reluctance for greater cooperation.

The pandemic’s spread has led to extraordinary gaps in supply availability versus short term demand requirements. For example, the OECD indicated that China, which manufactures half of the world supply of masks, found demand for masks at the peak of the crisis in China at ten times the beginning manufacturing capability of the country. Even after ramp up of production, demand in China was twice as large as the dramatically expanded manufacturing capabilities until the country’s infection rate declined. With both the EU and the US going through huge expansions of COVID-19 cases in March and into April, the global shortage problem has been continued and magnified despite additional capacity expansions occurring in other countries.

With no current vaccine to deal with the infections, countries faced with expanding case loads have often shifted to imposing export restraints to prevent loss of scarce supplies, encouraging expanded production, and using other tactics to address domestic demand even if reducing supply to other countries or even if local actions are counterproductive because of global supply chains and similar actions by others. Export restraints have been imposed by close to 70 countries or territories and include actions by China, the EU, the United States and many others, though restraints are arguably temporary and may have exceptions depending on the country applying the restraints. And countries who had export restraints at one point, may be significant exporters later (China) or had been exporters to hard hit countries prior to ramp up of internal demand (e.g., U.S. to China).

Importance of transparency in times of crisis

Each government attempts to provide some level of transparency to its citizens and businesses on actions it is taking. Members of the WTO have committed to providing information on trade measures taken to respond to COVID-19 and groups of countries (G20) have supported that effort. As of April 14th, WTO Members had provided 49 notifications of trade actions related to COVID-19 that either restricted goods or liberalized movement of goods https://www.wto.org/english/tratop_e/covid19_e/covid19_e.htm. While this is a start, there are likely dozens or hundreds of other actions that have not been notified as yet (including actions that may have been withdrawn after a period of time). The lack of full transparency by WTO Members is unfortunate and prevents other Members to understand the reality around the world or to understand potential best practices by other trading partners.

Some business trade associations have put together data bases of actions addressing particular actions important to their members. For example, the Baltic and International Maritime Council (“BiMCO”) has compiled and updates port restrictions/requirements including ability of crew to depart cargo ships in ports, etc. https://www.bimco.org/ships-ports-and-voyage-planning/crew-support/health-and-medical-support/novel-coronavirus—implementation-measures. Similarly, IATA has collected and updates data on requirements for airlines (passenger and air cargo) by country. https://www.iata.org/en/programs/safety/health/diseases/government-measures-related-to-coronavirus/. The data compiled is obviously important for the ships and planes moving cargo internationally. So transparency exists because of efforts of business associations. Unfortunately, one does not see any effort by governments to harmonize requirements across countries to simplify and reduce the costs of moving essential goods.

It does not appear that there are readily accessible data on all suppliers globally of essential medical goods, capacity expansions, current bottlenecks, product availability, etc. It is not clear if such data could be compiled by industry associations or by governments. Presumably such information would be important for a global effort to maximize availability of products to all countries during the pandemic, identify ongoing shortages, prioritize where additional products are needed and so forth. The lack of such information has to be a major shortfall in the transparency needs to effectively deal with the pandemic.

Individual governments, of course, address internal needs on an ongoing basis through notices, regulations, etc. Many of these actions could be notified to international organizations (e.g., to the WTO) in addition to being available domestically. Expanding notifications would improve transparency and potentially encourage other governments to adopt best practices of other countries.

In the United States, many agencies, as well as the White House, are involved in different aspects of keeping goods moving during the pandemic or in restricting the export of such goods. For example, to look just at a few of the agencies involved in the United States, the State Department has made announcements on ensuring H-2 visas for farm workers. https://travel.state.gov/content/travel/en/News/visas-news/important-announcement-on-h2-visas.html. Homeland Security and Customs and Border Protection have taken various actions to expedite clearance of essential goods or implement Administration restrictions on the export of goods. https://www.fema.gov/news-release/2020/04/08/fema-covid-19-supply-chain-task-force-supply-chain-stabilization; https://www.cbp.gov/newsroom/coronavirus. The Department of Agriculture and the Food and Drug Administration have issued various notices addressing special needs for agricultural goods with the collapse of food service sector which supplies restaurants (e.g., temporary waiver of requirements for country of origin information or certain labeling requirements for goods originally destined for food service that are being sold at retail). https://www.usda.gov/coronavirus; https://www.ams.usda.gov/content/usda-announces-labeling-flexibilities-facilitate-distribution-food-retail-locations; https://www.fda.gov/emergency-preparedness-and-response/counterterrorism-and-emerging-threats/coronavirus-disease-2019-covid-19. FEMA, EXIM and others are all playing roles as well.

Conclusion

The COVID-19 pandemic has created extraordinary challenges for the health of the world’s peoples and has imposed unimaginable costs to the global and national economies. As countries work through their individual challenges, there are a spectrum of options to pursue that will reduce or expand the human and economic costs of the pandemic. International organizations are only as strong as their member governments permit them to be. Many observers have lamented the lack of global leadership. Such lack of leadership handicaps the ability and likelihood of countries to minimize the damage from the pandemic and to prepare better for future challenges. Transparency should be the bare minimum we receive from the world’s governments. While there is certainly some transparency on COVID-19 and trade actions being taken (better in some countries than others), we are not maximizing the benefits that broad-based transparency would make available for countries individually or acting collectively. There is still time for a better effort. There are real costs for failing to do all that can be done on this issue.