Competing Priorities in a post-Covid world

10 GLOBAL THEMES

Theme 7: Competing Priorities in a post-Covid world

Government responses to Covid-19 will amplify geopolitical and socioeconomic risks through 2022, while the pandemic will continue to disrupt global equity markets and frustrate the wider global economic recovery. Against the backdrop of worsening relations between the US and China, governments have prioritised local resilience over global efficiencies as multilateral institutions have become geopolitical battlegrounds. The lack of an internationally coordinated response to a disease that does not respect national boundaries will prolong economic disruption and amplify social inequalities that drive security risks for organisations.

Associated risks from fragmented responses to Covid-19 are evident when considering the inequities around vaccine distribution. Despite having enough vaccine supply to inoculate the minimum threshold for global herd immunity – 70% of the global population – we are unlikely to reach this goal until mid-2022, in a best case scenario.

High income and upper-middle-income countries have purchased and administered most vaccines to date, frustrating access for lower and middle income countries. The World Health Organization (WHO) aims to deliver 2 billion vaccine doses to lower income economies by Q1 2022 through its COVAX facility. However, poor logistical capabilities in these countries will frustrate efficient vaccine administration, while the roll out of booster shots in high-income countries will further frustrate distribution efforts.

Despite the high likelihood of vaccinating 70% of global population in 2022, Covid-19 will become an endemic disease with seasonal flare ups occurring in developing countries over the coming year(s). Government restrictions on economic activity will continue through 2022, mainly confined to countries where populations have low vaccination levels. However, the risk of new variants of SARS-CoV-2 stemming from uncontrolled spread will remain at the forefront of concerns for all governments, including those in jurisdictions with high vaccination levels. Should new variants emerge that undermine the effectiveness of vaccines currently in distribution, governments will likely enforce restrictions whether these come in the form of domestic lockdowns or travel restrictions targeting certain countries or regions.

COVID Vax Map_2021

The economic impact of Covid-19 and inequities around vaccine distribution will intensify a K-shaped recovery through 2022, driven by high debt levels, structural unemployment and slow recoveries facing many industries. While governments in high-income countries have unleashed unprecedented monetary measures, many rescue packages have aimed to keep households and small businesses afloat rather than driving stable economic growth. Entire populations across these economies remain concerned about unemployment as inflation and energy prices rise. These socio-economic variables stand to amplify public grievances and pre-existing distrust towards governments, unless policymakers can shore up economies and ensure supply chain resiliency, while coordinating with central banks to temper the rate of inflation.

The economic aftershock from the pandemic will hit emerging economies hardest given their limited financial resources and rising debt, while a continuing dip in trade, travel and tourism will impact millions of people living in fragile contexts. Constrained economic environments and a lack of social mobility will exacerbate sectarian divisions and drive social unrest, particularly in countries with low social capital. Governments will remain the primary target of unrest, but organisations perceived as driving structural inequalities will likely become targets themselves.

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