World News: Western Economies Adapt to Covid

Surges --- Rising vaccinations are key, as

governments and businesses impose less
stringent policies
Hannon, Paul . Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]. 29 July 2021: A.8.

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Western economies are learning to live with Covid-19. As each successive wave of the coronavirus has washed
over the West, the virus has wreaked less economic damage than the last time around.
Vaccines have been the decisive factor behind the improved resilience in the face of the latest surge driven by the
more transmissible Delta variant, meaning rising caseloads are translated into far fewer hospitalizations and
deaths.
In the U.K., where 88% of adults have received at least one dose, falling case numbers in the past week -- and
Covid-19 fatalities that have been much lower than in previous surges -- have given rise to early hopes that the
Delta rise is receding even after much of the country relaxed restrictions this month.
But the improvement in economic performance from one surge to the next also reflects a host of adaptations to
the pandemic by governments and businesses. Governments across the U.S. and Europe have avoided imposing
the drastic lockdowns that were implemented in the first pandemic surge, believing they could be more selective in
their restrictions and just as effective.
In some cases, as in the U.S., U.K. and Germany in early 2021, the result was a higher death toll than in the first
surge, partly explained by the spread of the more transmissible Alpha variant. Elsewhere, as in France, Italy and
Canada, both economic and health outcomes were better in the second surge than in the first.
Businesses also have developed new practices, from factories figuring out how to better space out workers while
adding more shifts, to thinning out the number of employees on site at one time.
"This stage of the pandemic is better manageable simply because we're all used to it," said Katrin Sulzmann,
spokeswoman for the Voith Group, a German manufacturer of paper machines and hydropower equipment. The
company reported a 21% rise in new orders year-over-year for the six months ended in March, and about the same
revenue.
"The first wave was a shock for companies, the workforce had to work remotely and all of it had to be fixed. This
infrastructure is now in place," Ms. Sulzmann said.
"In most advanced economies, every new wave has had a lower impact on economic activity than the previous
one," said Gilles Moec, chief economist at AXA, the insurance giant.
The pattern in the developed West isn't true for the entire world. For much of the Asia-Pacific region, success in
curbing infections in earlier surges and slower shot rollouts mean economies are more vulnerable to Delta and
restrictions are likely to be extended. In parts of Africa, where a small minority is vaccinated, lockdowns have been
reimposed.
The difference in rich Western countries is that the most vulnerable part of the population has been vaccinated.
The surge in new infections this time hasn't been followed by a rise in hospitalizations, which had been the trigger
for tight lockdowns earlier in the pandemic when governments feared their health systems would be overwhelmed.
"In countries with high vaccination rates, there is an increasing disconnect between rising Covid-19 cases and

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hospitalizations and deaths, while in countries with low vaccination rates, Covid-19 cases and
hospitalizations/deaths are rising proportionately," wrote Vishwanath Tirupattur, an economist at Morgan Stanley,
in a note to clients.
Underlining the contrast between highly vaccinated and thinly vaccinated countries, the International Monetary
Fund on Tuesday raised its growth forecasts for the former, and lowered its growth forecasts for the latter. The
IMF now expects rich countries to grow faster than it did in April. By contrast, it expects India and five Southeast
Asian countries -- Indonesia, Malaysia, the Philippines, Thailand and Vietnam -- to grow more slowly. Overall, its
prediction for global growth in 2021 is unchanged since April, at 6%.
The largest rise in the IMF's growth forecasts was for the U.K., where the government imposed a strict, new
lockdown at the start of the year as infections surged. But those rules had a smaller impact than the IMF had
expected, a pattern repeated across rich economies.
"There was greater adaptability to those restrictions and we saw economic activity coming back somewhat
stronger than we had expected," said Gita Gopinath, the IMF's chief economist.
The IMF now expects the U.K.'s economy to grow by 7%, compared with the 5.3% expansion it forecast in April.
Back then, the IMF had expected India's economy to expand by 12.5%, but now sees it growing by 9% following a
surge in Delta infections through a largely unvaccinated population earlier this year.
In the U.S., analysts cite three main reasons for why the rise of the variant is unlikely to make much of a dent in the
U.S. economic recovery.
First, the increasing level of vaccinations in the U.S. has made people more likely to keep working and spending
money despite the rise in cases. Second, there is little appetite to return to the lockdowns and business closures.
Third, the increase in new cases in the U.S. so far has been concentrated in just a handful of states, limiting the
national economic impact.
Even if rising infections force another round of broad business restrictions, analysts say that likely would have less
of an impact on the economy than it did at the start of the pandemic because Americans have found ways to adapt
to Covid-19.
About 69% of the U.S. adult population has had at least one shot, the U.S. Centers for Disease Control and
Prevention has said. The rising rate has prompted consumers to spend money on meals, vacations and other
services that were unavailable to them for the past year.
In the U.K., deaths within 28 days of a positive Covid-19 test over the past seven days have averaged 70 a day,
compared with almost 1,300 at the previous surge's peak in April. If early signs of decreasing caseloads continue
in the U.K., it will be a further signal of economic hope for the rest of the vaccinated world.
---
Jason Douglas in London contributed to this article.
Credit: By Paul Hannon in London, Tom Fairless in Frankfurt and David Harrison in Washington

DETAILS

Subject: Infections; COVID-19 vaccines; Fatalities; Economists; Economic growth;

Coronaviruses; Immunization; Economic activity; Pandemics; Hospitalization;
Economic impact

Business indexing term: Subject: Economists Economic growth Economic activity Economic impact

Location: United States--US India United Kingdom--UK

Publication title: Wall Street Journal, Eastern edition; New York, N.Y.

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 First page: A.8

Publication year: 2021

Publication date: Jul 29, 2021

Publisher: Dow Jones &Company Inc

Place of publication: New York, N.Y.

Country of publication: United States, New York, N.Y.

Publication subject: Business And Economics--Banking And Finance

ISSN: 00999660

Source type: Newspaper

Language of publication: English

Document type: News

ProQuest document ID: 2555868027

Document URL: https://www.proquest.com/newspapers/world-news-western-economies-adapt-

covid-surges/docview/2555868027/se-2?accountid=49936

Copyright: Copyright 2021 Dow Jones &Company, Inc. All Rights Reserved.

Last updated: 2021-07-29

Database: U.S. Newsstream

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