While researchers are grappling with the varying fatality rates due to coronavirus, BofA Research has found that the most vulnerable set is older people with pre-existing health conditions, who live in colder countries that do not have a BCG vaccination policy.
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Among EM (emerging market) countries, Turkey, Lebanon, and Hungary may be vulnerable to drawdowns in case of a second wave of infections, unless there is prompt policy action, while India, Indonesia, the Philippines, and China may be able to weather a similar storm with less damage.
COVID-19 has so far infected 4.1 mn people worldwide, claiming more than 280,000 lives - a heavy blow to the hubris of modern civilisation. The high contagion rate of the virus and its varied impact on countries has left policymakers grappling as they struggle to strike a balance between controlling its spread and shutting off economies. Researchers are puzzled by a high variation in the fatality rate across countries.
The research tested 14 variables covering a wide range of themes - demographics, health profiles, healthcare infrastructure, social structure, climatic conditions, globalisation, and policy response - for 85 countries (31 advanced and 54 emerging/developing economies as per IMF classification) with GDP above $50bn and population above 1 million.
While 8 of the 14 factors can each explain the variation in the casualty rate of the countries to some extent, the combination of proportion of older population (65+ years), obesity rate, DHL Global Connectedness Index, timing of lockdown, and BCG vaccination policy can together account for 64 percent of the variation in death rates. Adding the other three explanatory variables (average temperature, urbanisation and prevalence of asthma) to this list did not improve the results incrementally, the research said. "There is no denying that sheer luck can be a factor - but there is no way to quantify it. Surprisingly, some of the usual suspects such as population density, average household size and number of hospital beds are not of much assistance," it said.
There has been a conundrum of significantly worse outcome for the Developed Markets (DMs) as compared with Emerging Markets (EMs). EMs are younger (average proportion of 65+ year olds of 8 percent vs 19 percent for DMs) with warmer climes and lesser urbanization (64 percent urbanisation rate vs 80 percent for DMs).
Further, unlike the western world, most of them have an active mandatory BCG vaccination policy, and were quick to act on shutting their economies down. Even the bane of poor connectedness to the rest of the global ecosystem has turned out to be a boon during the pandemic, providing an automatic distancing with other nations, the note said.
The variables also help to explain why two countries with apparently similar characteristics can have very different casualty rates. Japan and Italy both are old, developed countries that are well connected with the rest of the world. But a significantly lower incidence of obesity for the Japanese (4 percent vs 20 percent for Italy), in conjunction with an active BCG vaccination policy (compared to a non-existent one in Italy) can partially explain the wide divergence between their casualty rates (8.4 persons per million in Japan versus 148 persons in Italy).
"There is ample speculation that COVID-19 could follow the patterns of the Spanish flu with a more devastating second wave and yet another third wave. While we do not have an answer to that, we think it would be prudent to be prepared for all scenarios," it said. "Granted that the opportunity cost of shutting down economies is arguable, but a lid on the death toll, even at the cost of short-term economic pains, deserves prioritization in our view," BofA Research said.
Special attention must be provided to older people with pre-existing health conditions, who live in colder countries that do not have a BCG vaccination policy, as they are the most vulnerable cohort, it said.
