The following analysis is based on Morning Consult’s high-frequency economic indicator data. Read more from our September 2021 U.S. Economic Outlook report.
As the global economy looks to get back on track, access to vaccines has proven to be a key component in the recovery of consumer sentiment. While a number of factors can influence the average consumer’s decisions during these uncertain times — including concerns over the virus, underlying health issues, vaccine hesitancy, income reliability, work status and family situations — a key building block at the country level is vaccine access. Vaccines enable better public health outcomes, which enable improved consumer confidence, which enables the rise in service-sector spending needed for the economy to fully recover.
Vaccines lay the foundation for consumer sentiment improvement
Countries that have vaccinated a larger share of their populations against COVID-19 have seen consumer sentiment bounce back more strongly than those that have not. There is a strong positive correlation (69 percent) between the share of a country’s population that is fully vaccinated and the percentage change in Morning Consult’s Index of Consumer Sentiment (ICS) from Jan. 1 to Aug. 25. In the last eight months, Western European countries with high vaccination rates have seen the most improvement, with consumer sentiment in the United Kingdom, Spain and Italy rising 25 percent, 24 percent, and 22 percent, respectively, during that time period.
Across the globe, increases in consumer confidence during the pandemic have a strong positive correlation with increases in consumer spending. Until consumers feel more comfortable taking part in activities across the service-based economy, a full economic recovery is not possible. Vaccines are central to keeping case numbers, hospitalizations and deaths low — and thus instilling the confidence consumers need to return to normal activities.
Developing economies with lower vaccination rates are struggling to bounce back
A resurgence of COVID-19 in 2021 has hindered the recovery of consumer confidence in developing economies with lower vaccination rates. After tracking higher in 2020, consumer confidence levels in India and Brazil — where just 10 percent and 26 percent of the respective populations are vaccinated — dropped considerably this year due to major pandemic outbreaks, and now lie at 14 percent and 19 percent below where they were in January 2020. By comparison, Morning Consult’s ICS in Canada and the United Kingdom are only 1 percent and 4 percent below their pre-pandemic levels, and the ICS in France is actually 4 percent above pre-pandemic levels.
An outlier in this regard is the United States, where consumer confidence relative to pre-pandemic levels is now the lowest among countries tracked by Morning Consult, despite relatively high vaccination rates. In order for the correlation between vaccination rates and consumer confidence to hold, public health outcomes also need to improve. However, vaccine hesitancy in the United States remains high in certain geographic areas, resulting in much lower vaccination rates in those regions and generating a key driver of the worsening public health situation. This, along with public policy decisions, has resulted in surging cases and hospitalizations in recent weeks, driving a sharp decline in consumer sentiment and increased uncertainty about the resilience of the economic recovery.
Global vaccine access remains uneven
Vaccine distribution remains disparate across countries, with higher rates of access in wealthier countries where pharmaceutical manufacturing is concentrated and governments have greater fiscal space to purchase large quantities of vaccine. When looking at countries by income groups as defined by the World Bank, high-income countries have vaccinated an average of 54 percent of their populations, compared to 11 percent for lower-middle-income countries and 1 percent for low-income countries. The world vaccination rate is more than 26 percent, but only 3 percent in Africa.
Uneven global vaccination rates are not due to a lack of desire to get vaccinated: Vaccine hesitancy is generally higher in developed, highly vaccinated countries compared to less-vaccinated ones. According to Morning Consult’s global vaccine tracking, only 6 percent of respondents in India said they were unwilling to get vaccinated or were uncertain, compared to 16 percent in France and 19 percent in Germany.
With vaccine diplomacy and donation programs still far from achieving their stated goals, low vaccine access will act as a headwind to the global economic recovery throughout 2022. Global leaders have pledged funds aimed at delivering billions of doses of vaccines to low-income countries in the remainder of 2021 and early 2022. However, since a large share of the donations consist of funds rather than vaccines, this timetable is unlikely to be met, especially now that the United States and other developed countries plan to administer third doses of vaccines to their populations. Thus, low global vaccination rates are set to persist in the near future throughout much of the world.
Global consumer recovery requires global progress on vaccines
Looking ahead, low vaccination rates will hold back the global economic recovery. Vaccinations drive down the severity of health outcomes resulting from COVID-19, boosting consumers’ comfort engaging in service-sector activities, which in turn allows consumer confidence to climb higher. On the other hand, a lack of vaccinations depresses consumer confidence and demand in less-vaccinated areas. There likely can be no sustained global recovery without a more widespread global vaccination program.