In focus

Emerging markets lag in Covid-19 vaccine race

Constraints on the supply of Covid-19 vaccines have meant that the roll-out has been much slower in  emerging markets (EM) relative to developed markets. While some EM such as Chile and those in Central Eastern Europe are distributing inoculations relatively quickly, most are lagging behind.

Despite warm words in recent weeks, the hoarding of vaccines in developed markets remains a key headwind for supply to EM. China and Russia’s efforts to build alliances by filling the vaccine vacuum with the supply of their own treatments will help some EM, particularly those that will be licensed to manufacture shots. However, the reliance on imports remains a major vulnerability for many EM, and there is a risk that these economies underperform this year.

How is vaccine distribution progressing in emerging markets?

In December we noted that while many EM economies would benefit significantly from the roll out of Covid vaccines, hopes for a rapid return to normality should be tempered. Many EM are blighted by relatively poor infrastructure and governance, while few had enough vaccines on order to immunise their populations and were relying on treatments that had not yet been proven effective and approved for use.

Unfortunately, this has so far been borne out in vaccination data.

There are some success stories. For example, as the chart below shows, as of 19 February about 15% Chile’s population had received at least one dose of vaccination, and it had inoculated an impressive 5% of the population in the previous seven days. Chile was one of the few EM that had a large amount of vaccines on order, including from suppliers such as Pfizer that were ready to be used.

Meanwhile, countries in parts of Central Eastern Europe are also faring relatively well, having vaccinated about 7% of their populations as they access European Union vaccine supplies. There has also been a positive surprise in Turkey where the rate of vaccination is accelerating.


However, most major EM countries are lagging behind in the vaccination race. As of 20 February India and Mexico had delivered a first shot of vaccine to about only 1% of their populations, while Brazil had inoculated only 3%. Even in China and Russia, which are the only two EM to have developed their own treatments, are lagging behind, albeit the data are only to 9 and 10 February respectively.

The key constraint on the roll-out of vaccines so far appears to have come from the supply of treatments. For example, Brazil started the roll-out of vaccines in January after receiving deliveries of Sinovac’s treatment from China and the Oxford/AstraZeneca vaccine that was manufactured in India. However, it had to temporarily pause distribution earlier this month after further deliveries failed to arrive.

Such delays are not particularly surprising. After all, most EM rely on imports of vaccines at a time when richer nations have hoarded treatments. At the same time, difficulties in establishing new facilities have seen manufacturers undershoot production estimates.

Vaccines: a soft power play

Supply shortages should ease as manufacturing processes are optimised and new treatments come online. However, some EM are still better placed than others and, despite recent warm words from European policymakers, vaccine nationalism remains a threat to the supply of vaccines to EM that rely on imports.

As the maps below show, China and Russia are trying to fill the vaccine vacuum left by hoarding in developed markets. These supplies could be used to build soft power across Africa, Latin America and parts of Asia.




Some EM such as Brazil and Egypt will be licensed to manufacture vaccines themselves, which could help the current pace of inoculation to accelerate in the months ahead. However, other major EM such as Mexico that continue to reply on imports of shots will remain subject to supply interruption and slow roll out.

Are vaccine laggards destined to underperform?

All other things equal, those EM that lag behind in the roll-out of vaccinations will be slow to fully re-open their economies and therefore underperform. That being said, there are nuances to the story. China and some other parts of Asia that have successfully contained Covid have been able to largely lift restrictions and these markets have performed relatively well.

At the other end of the spectrum, new Covid infections have declined in India and South Africa despite poor management of Covid and slow roll-out of vaccines. This suggests that some form of herd immunity has been reached and that these markets could perform surprisingly well.

So while the roll out of vaccines in EM merits close monitoring, they may not be the only key to macroeconomic recovery this year. 

The opinions contained herein are those of the author and do not necessarily represent the house view. This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Cazenove Capital does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Cazenove Capital has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Cazenove Capital is part of the Schroder Group and a trading name of Schroder & Co. Registered Office at 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. For your security, communications may be taped and monitored. 

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