India’s second wave of COVID-19 has drawn rare media attention in Western countries looking forward to a relatively normal summer. Beyond India’s disaster, many other emerging and frontier markets, especially in Asia, are suffering similarly alarming spikes in cases. The causes are complex and idiosyncratic to each country, but two categories are surfacing: mostly unvaccinated populations exposed to new variants, and a smaller group of countries in the midst of vaccine rollouts that have nevertheless been forced back into lockdown. The latter is a particular concern for policymakers relying on vaccines to deliver projected V-shaped recoveries predicated on avoiding economically damaging restrictions.

Some of this can be linked to the lower efficacy of Chinese Sinopharm and CoronaVac vaccines used for rapid rollouts in Chile, Bahrain and the Seychelles. With India’s unilateral decision to halt exports of road-tested AstraZeneca vaccines, countries relying on allocations from the COVAX initiative now find themselves with a difficult decision: pay higher rates elsewhere amid production bottlenecks, turn towards Russia’s Sputnik V, gamble on promising candidates, or fall back on Chinese supplies. Whichever they choose, without new commitments from well-stocked OECD countries, delays in making up shortfalls of hundreds of millions of shots are likely to stretch into 2022.

A two-track global vaccination rollout will widen the diverging fortunes of developed economies, who suffered deep recessions but have the credit ratings and fiscal capacity to stimulate a fast recovery, and emerging economies susceptible to a reversal of booming capital inflows and limited budgets. Uneven rollouts within countries along demographic, digital, ethnic, and income divides are also set to entrench a K-shaped recovery, as well as widening the window for the emergence of new variants. An unsynchronised global recovery will likely be a longer and more arduous one, bringing a new set of risks. As a handful of developed countries charge for the finish line, for much of the world, the race to control COVID-19 is still being run.

While emerging markets are struggling to battle COVID-19 outbreaks due to new variants, insurers in these regions are wondering how to adapt to a post-COVID world. Find out all you need to know so that you can adapt with Axco's market analysis tools.

This article first appeared in the Axco Flashpoints newsletter, which provides monthly analysis on emerging risks and geopolitics from our Global Risk Intelligence and Data (GRID) team. You can sign up here.