Since mid-March, the epidemic in India has continued to escalate, and the latest daily number of new cases has exceeded 410000, ranking the highest in the world, especially in the context of the recent improvement in the epidemic in Europe and emerging markets. So what is the possible evolution path and internal and external effects in the future? We will make an analysis in this article.

Current situation of the epidemic in India: it continues to escalate and the severity is still underestimated

The epidemic in India has continued to escalate since mid-March. As of May 5, a total of 21.49 million cases have been diagnosed in India, with more than 230000 deaths, an increase of more than 410000 per day and accelerating. This level far exceeds the daily high of 300000 added in the United States at the beginning of the year, and even if its population size is taken into account, it is considerable (~ 280 per million people).

The daily average number of new confirmed cases in India has reached 386000, and the positive rate of nucleic acid testing is more than 21%.

But what is more serious is that due to the limited detection capacity, the current epidemic in India may not yet reflect its full picture. The current daily test is less than 2 million, with an average of 211.3 tests per thousand people, which is significantly lower than in other countries. India's current test positive rate of 21.5% and still rising seems to show this. As a result, confirmed cases are likely to continue to rise in the short term.

At present, the detection of nucleic acid in India is still insufficient, combined with the results of serum survey, it is more likely that there are undiagnosed cases in the population.

Causes of outbreak: loose policies, inadequate vaccine protection, catalysis of virus mutation

Policy relaxation, early return to work and open rallies after the relief of the epidemic are the main backgrounds. The Indian government relaxed restrictions in May 2020 and allowed no more than 100 people to gather in September, faster than in most developed and emerging markets.

In addition to large-scale campaigns and religious rallies, the weak health care system is also an important reason. India has only 0.5 beds per 1,000 people, and oxygen shortages have also occurred recently.

In addition, the Indian double mutant virus may also catalyze the outbreak, but there is no direct evidence that the vaccine is ineffective.

Evolution path: usually peaked 3-4 weeks after the blockade, but India may take relatively longer

According to the previous experience of repeated outbreaks and prevention and control in Europe and the United States, generally speaking, after the implementation of strict prevention and control measures, the new diagnosis peaked three to four weeks later, but taking into account India's current prevention and control efforts, detection capabilities, medical conditions and other factors, it may take some time to reach its peak. However, with increased awareness of prevention and control and a surplus of vaccines in the United States and Europe, increasing exports to India are expected to help.

Potential impact: overall controllable recovery; focus on some emerging markets and supply chain disturbances

For India itself, the escalation of the epidemic has led to a domestic vaccine emergency and stagnant resumption of work, but financial assets have not responded much. We estimate that only relying on India's domestic production (authorized by AstraZeneca PLC and domestic research and development of vaccines) and no export at all, it will be difficult to meet 70 per cent vaccination coverage this year (1.5 billion doses are still needed), so India has now decided to stop exports and increase imports.

In addition, high-frequency data show that the resumption of work has fallen sharply again to the first half of the epidemic, so the impact on production and demand will be apparent for some time to come. However, India's financial markets reacted relatively calmly, with no significant volatility in the stock market, exchange rate and capital flows since the outbreak.

Since the outbreak escalated in March, the stock market has basically remained stable, rising 2.3% as a whole. The Indian rupee weakened for a time but rebounded again in April.

Globally, the escalation spillover of the epidemic in India is mainly reflected in three dimensions: the spread of the epidemic, the supply of vaccines in India, and links with the global economy.

First, India's neighbours, especially those with slow vaccination, may face pressure, such as the recent escalation of the epidemic in Nepal, but enhanced prevention and control in developed markets, especially high vaccination rates, are expected to provide protection.

Secondly, some less developed countries, such as Africa, are highly dependent on the WHO Covax project to provide vaccines, or suffer from India's suspension of exports, but it has nothing to do with the overall situation of global vaccine supply, especially after the basic realization of mass immunization in the United States and Europe in the middle of the year.

Third, in the trade dimension, India's main imports are crude oil, grain, gold jewelry, and some electronic and mobile phone products, which have the largest import and export exposure to China and the United States, respectively, and the direct impact is controllable. but it could exacerbate tensions in some global supply chains, such as shipping.

On the whole, the biggest lesson of the epidemic in India is the imbalance in the withdrawal of the epidemic among different markets. Vaccination has quickly ensured that the developed countries represented by Britain and the United States have come out of the epidemic and the general direction of economic repair, and will not be reversed by the escalation of the epidemic in India, but some emerging markets except China are slow in vaccination and in short supply. as a result, the progress of the withdrawal and recovery of the epidemic will still lag behind, so the pattern that developed countries are better than emerging ones we predicted at the beginning of the year will continue.