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The timeline for vaccine roll-out in Emerging Markets depends largely on availability and existing infrastructure. Therefore, the path to recovery from COVID-19 shock will remain bumpy in 2021 and full recovery will not take place before 2022, economists at ABN Amro apprise.

Key quotes

“The path to post-pandemic normalisation and recovery has started but will remain bumpy and full of pandemic-related uncertainties, with clear differences between countries/regions reflecting different policy approaches and variations in the strength of public health systems. North-East Asia (China, Taiwan, South Korea) has done well in getting the pandemic under control, while many EMs including India, Brazil and Russia are still struggling. Meanwhile, in relative terms, Asia and Africa are reporting fewer fatalities than the Americas and Europe.”

“We expect vulnerable groups and key workers to be inoculated by mid 21-Q2. We expect approval of full market access of vaccines and the start of a broader roll-out in 21-Q3, bringing herd immunity closer.”

“The specific timeline for vaccine roll-out in EMs depends largely on availability and existing infrastructure. Countries that have secured deals with large pharmaceutical companies and have adequate cold storage infrastructure and vaccine logistics know-how could reach so-called ‘herd immunity’ prior to some advanced economies.”

“We cut our EM average growth forecasts for 2020 from +4.1% pre-corona to -3.0% now. The sharpest cuts took place in Latin America (Peru, Mexico, Colombia) and South Asia (India, Philippines, Thailand). Only for a few Asian countries that were successful in containing the pandemic (China, Taiwan, Vietnam) we expect positive annual growth in 2020. Nevertheless, we expect negative annual growth in 2020 in all EM regions, with Latin America hit the most (-8.2%) followed by emerging Europe (-4.1%) and emerging Asia (-1.5%).”

“For 2021, we now forecast US growth at 3.2% and eurozone growth at 2.7%. For EMs, we expect annual growth to accelerate to almost 6% next year, with emerging Asia in the lead (around 7%) followed by emerging Europe and Latin America (around 3.5%). However, the pandemic will leave its mark: by end-2021 emerging markets will have lost over 6% of GDP compared with our pre-covid-19 base case. Many EMs (excluding countries like China or Taiwan) will not have returned to pre-corona GDP levels before 2022.”