IN FOCUS6-8 min read

Has protecting populations from Covid boosted growth?

Our analysis shows protecting populations from Covid boosted growth last year, but a swift vaccine roll-out may prove crucial this year.



Tina Fong

After living with lockdown restrictions for more than a year now, the UK economy is expected to fully reopen next month. But this is no way a done deal with the latest Indian variant of Covid-19 having the potential to spoil the party.

Those looking forward to a return to some semblance of normality can take some comfort from the fact that the UK is leading the way globally on vaccinations. Over 70% of the adult UK population has had the first dose of the vaccine thus far.

Besides lifting hopes, this speedy delivery of vaccines is likely to result in a strong rebound in Q2 GDP growth

This is in stark contrast to last year, when the UK had one of the highest Covid-19 mortality rates in the world. The UK economy also experienced one of its deepest recessions since the 1920s.

So, does this mean that the effectiveness of countries in protecting their populations via vaccinations has led to better growth outcomes?

The economic outcomes of not protecting the population

The trade-off between the economy and saving lives from the pandemic was first looked at by a scientific online publication Our World in Data. It found that the most severe economic downturns were generally in countries with the highest Covid-19 death rates.[1]

Chart 1 shows a similar picture, in that countries with higher real GDP growth last year were typically more effective in protecting the health of their populations.

Here, we have looked at excess mortality to give a fuller picture of the devastating impact of the virus. Excess mortality is the estimated number of deaths from the pandemic compared to deaths if Covid had never happened.[2] Note the size of the bubbles in chart 1 illustrates the population of the country (the larger the bubble, the bigger the population).   


The speed at which the authorities in the Asia Pacific region, such as China and Taiwan, responded to the pandemic early on has meant that the regional economy was able to bounce back sooner. Despite being at the epicentre of the crisis, mortality rates in China were lower compared to other countries and economic growth ended 2020 on a high note.

Perhaps the authorities in Asia have learnt painful lessons from past pandemics. For instance, this time around, the Chinese authorities have acted faster to restrict travel compared to the outbreak of SARs (severe acute respiratory syndrome) in 2003.

By contrast, the countries that had the deepest downturns and highest Covid-19 mortality rates were generally located in Europe and the Americas.

Despite being considered one of the best providers of healthcare in the world, the pandemic took its toll on Italy’s economy and population.

The UK, meanwhile, was one of the worst performing economies in 2020. But the GDP number masked the different accounting of healthcare and education spending during the lockdown.[3] This made the UK's official figures less comparable to its international peers. Nonetheless, we would have arrived at the same conclusion if we used a measure without these distortions, such as industrial production.

Despite higher excess deaths from Covid-19 in countries such as Russia and South Africa, shown in chart 1, the impact on GDP was less severe than in places like the UK. This is because the lockdown restrictions were eased sooner in some of these economies. For instance, the Covid-19 Government Response Stringency Index, an indicator to measure policy response to the pandemic, shows restrictions were relaxed significantly last summer in Russia.[4]

Clearly, there are various factors that have impacted the Covid-19 mortality rate and the economy that are not captured by the management of the crisis by policymakers. But this is one simple way to illustrate how countries that have been more effective in protecting the population have seen better growth outcomes.

Does the pace of vaccinations matter for a country’s growth outlook?

Before answering this question, we should bear in mind that the vaccine roll-out is not the only driver for a country’s growth prospects. We have not considered the natural level of immunity from Covid-19 of each country. But we do see a pattern whereby countries with stronger upgrades in consensus GDP expectations have generally led the way in the vaccine race.[5]  In particular, there appears to be more positive effects on growth forecasts when vaccination rates (first dose) exceed 40% of the population.

Chart 2 shows how consensus forecasts for GDP growth in 2021 have changed since the start of the year compared to the proportion of the population vaccinated with the first dose of the vaccine.


So far, there has been a turnaround in economic fortunes. Countries such as UK, US and Canada that had dire mortality rates from the virus last year are now at the forefront of rolling out the vaccine programme. The forecasting community appears to have taken this on board and raised the growth outlook of these economies. Fiscal stimulus, particularly in the US, would also have played an important part in driving their growth outlooks.

In comparison, most of the emerging markets have struggled to keep up with the vaccine roll-out. One of the exceptions is Chile, where nearly half of the population have received the first dose of the vaccine. Upgrades to consensus growth forecasts this year for Chile have been some of the highest in emerging markets. Besides a high vaccination rate, the surge in copper prices is likely to have supported growth forecasts in Chile as copper exports account for around 10% of GDP.

Meanwhile, Mexico is an interesting case where growth expectations have been revised up despite a relatively low vaccine roll-out. According to estimates from experts in our Data Insights Unit, Mexico’s overall herd immunity to the virus is significantly higher. This is because a large share of the population already has natural immunity from being infected by the virus. This may help to explain the rosier growth forecast, rather than purely looking at vaccination rates. At the same time, spill-over effects from US fiscal stimulus have been important for growth expectations in Mexico.

While the Asia Pacific countries have been more effective in protecting their citizens from the pandemic, they have also been the laggards in the vaccine roll-out. That said, the change in growth expectations this year has been more mixed among these countries. While growth forecasts for New Zealand have been pulled down, despite strong fiscal spending, the consensus has turned bullish on Taiwan’s growth prospects. This may be due to the recent shortage of electronic chips that had boost demand and production for Taiwanese semi-conductors, which is a significant contributor to the economy.

Looking ahead, the challenge for these economies is that they have been so effective in managing Covid cases and mortality rates that they may have become complacent in vaccinating their populations. This may be seen in the latest spike in Covid-19 cases in Taiwan, which has led to the return of lockdown restrictions. Given the low level of natural immunity, it is likely that these countries will not be able to fully reopen until they get a large part of the population vaccinated.

Overall, the evidence is clear: it is in the interest of authorities around the world to get their populations vaccinated to save lives and support their economy to a better growth outcome.


[2] For India, we estimated the excess mortality based on the number of Covid-19 deaths being five times greater than if the pandemic had not occurred. 

[3]Source: ONS

[4]The Covid-19 government response stringent index was created by Oxford university and consists of 20 indicators such as school closures and travel restrictions.

[5]Here we are using consensus GDP forecasts from Consensus Economics as not all countries have released their Q1 GDP number. 


This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.


Tina Fong


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