Mumbai is half a world away from Massachusetts, but the deepening COVID-19 crisis there, and throughout India, drives home how much we’ve got riding on other nations getting the pandemic under control.
In this global economy, when they hurt, we feel it.
Countries with important economic and cultural links to Massachusetts are struggling with heavy caseloads and low vaccination rates. India, engulfed in a full-blown humanitarian tragedy, is the most dramatic example. But Canada, Mexico, Brazil, and parts of Europe are also lagging behind the United States, where 30 percent of the population has been fully vaccinated.
The pandemic’s continued grip abroad is a growing concern here at home. It poses significant public health risks, leaving more time for vaccine-resistant variants to emerge and cross borders. But there’s an economic danger as well: COVID-19 lockdowns elsewhere disrupt international supply chains, trade, and business and leisure travel.
Massachusetts has one of the country’s highest inoculation rates, with about 36 percent of residents fully vaccinated, but our reopening efforts remain vulnerable to new outbreaks abroad. That’s due to the pivotal economic roles played by tourism and conventions, international college students, and industries such as biopharma and information technology that depend on the global flow of supplies and highly skilled workers.
“Nobody is safe until everyone’s safe,” said Bhaskar Chakravorti, dean of global business at The Fletcher School at Tufts University. “India could be a case study in that.”
Consider: Students from India make up the second-largest international cohort at Massachusetts colleges and universities, after China, according to the Open Doors Report on International Educational Exchange. Indian workers are the largest recipients of federal H1-B visas, a crucial hiring tool for many employers in the state. And India is one of the world’s biggest makers of vaccines and generic drugs, and provides critical research and development to support the biopharma industry.
On Friday, the White House said it would ban travel from India, effective Tuesday, as the country reports some 3,000 deaths a day.
Elsewhere, the news isn’t nearly as grim, but is still troubling. Infections are stubbornly high in Canada and Mexico, Massachusetts’ largest and fourth-largest export markets, respectively. The border with Canada, which sends more tourists to Boston than any other country, has been closed for more than a year. And Brazil, another big fount of tourists, is a COVID hot spots, along with other parts of South America.
COVID remains a human health crisis, one with severe economic side effects. It all bodes especially poorly for the leisure and hospitality sector, which accounts for about 10 percent of the state’s jobs.
Until last year, international tourists and convention attendees had been a bountiful source of growth for hotels, restaurants, and attractions such as museums, the Duck Boats, and the New England Aquarium. That business has all but dried up.
“International leisure travelers are very important. They stay longer and spend more money” than domestic visitors, said Martha Sheridan, chief executive officer of the Greater Boston Convention & Visitors Bureau.
Sheridan expects leisure and business travel to Massachusetts to pick up a bit by the fall, but significant gains likely won’t be seen until next year.
The industry was deeply disappointed by Governor Charlie Baker’s decision last week to delay a full lifting of pandemic restrictions until Aug. 1, with Boston Acting Mayor Kim Janey tacking on an additional three weeks. That’s much later than the rest of the Northeast, including New York City, which plans to reopen July 1.
“That’s a very daunting date. It leaves most of the summer travel season behind us,” Sheridan said. “I am hopeful we will revisit this sooner rather than later.”
To be sure, the US economy is booming, fueled by the easing of pandemic restrictions and massive federal stimulus spending. The Commerce Department said last week that growth in the output of goods and services surged at an annual rate of 6.4 percent in the first quarter. But Europe fell back into a recession in the first three months of the year, the result of its slower vaccine rollout and continued lockdowns.
In Massachusetts, which experienced a sharper downturn than much of the nation last year because of the severity of the pandemic here, the economy soared at an 11.3 percent annual pace in the first quarter, according an estimate by MassBenchmarks, a collaboration between the University of Massachusetts Donahue Institute and the Federal Reserve Bank of Boston.
Economists don’t expect the powerful domestic recovery to be derailed by COVID — unless a virulent strain develops that can’t be thwarted by vaccines. But local business and academic leaders haven’t stopped worrying.
For local colleges and universities expecting an influx of returning students, two issues are paramount: vaccinations and visas.
Boston University, like several other area institutions, is requiring students to be inoculated before arriving on campus in the fall. While that shouldn’t be a problem for American students, nearly one third of its enrollees are from other countries.
For that reason, the school will allow its international students to be vaccinated in their home countries, even if the vaccines used haven’t been approved for use in the United States, according to Jean Morrison, BU’s provost and chief academic officer. However, depending on federal requirements in the fall, those students may have to quarantine on arrival.
BU is also providing an extra month of housing at no cost so students can finish their vaccinations here before going home for the summer. And it hopes to be able to resume on-campus shots by August.
“We’ve devoted a lot of attention to this,” Morrison said.
At Northeastern University, where international students make up almost a fifth of the student body, pharmacies and other third parties are being brought to campus to vaccinate students. The school is offering the one-shot vaccine from Johnson & Johnson to simplify the process.
“We are going to do as much as we can before they depart,” said Michael Armini, Northeastern’s senior vice president for external affairs. “In the fall, we will do vaccinations on arrival.”
More important for the higher-education world, the US State Department said last week it would make so-called national interest exceptions to visa restrictions for students and some researchers from countries including Brazil, China, the United Kingdom, and much of Europe. This makes it possible for students who might have been barred from traveling here to come for studies.
“The concern is real, but for a variety of reasons we are holding our own” when it comes to Boston’s elite schools retaining international students, said Jeffrey Thompson, an economist and vice president in the research department of the Federal Reserve Bank of Boston. “Nationally, and even in other parts of New England, there’s been a decline.”
For the state’s biopharma industry, all eyes are on India, where the COVID crisis could disrupt the pharmaceutical supply chain at a time when the world is in critical need of medicines and vaccines.
The current surge, for example, has made it difficult for India to keep up with the production of a version of the AstraZeneca vaccine.
“From a broader perspective, even here in Massachusetts, most pharma companies have some sort of dependence on India,” said Vivek Sharma, former chief executive of a global contract manufacturer of pharmaceuticals with significant operations in India. “There will be an impact. We just don’t know how much and when.”
India had been forecast to be the world’s fastest-growing economy this year, according to the Organization for Economic Development, but its deadly second COVID wave will likely change that.
Sharma, who is now a Boston-based partner at a private equity firm, said the situation is dire. His younger brother in India died of COVID in January, and in recent weeks two classmates and a cousin have succumbed to the virus. He keeps learning of more relatives who have gotten sick.
“I don’t see things improving for four to six weeks,” he said. “It might get worse before it gets better.”
Already, CVS Health, the Woonsocket, R.I., drugstore chain, has made adjustments given the public health crisis in India, though it didn’t offer specifics.
“We’ve adapted our supply chain to account for COVID-19 spikes in primary supply chain locations, such as India, to help ensure our ability to fill prescriptions in our retail, mail, and specialty pharmacies,” Mike DeAngelis, a company spokesman, said.
Massachusetts companies with a major presence in India — including General Electric and Thermo Fisher Scientific — are helping to secure much-needed medical supplies and COVID-19 testing kits, not only for their own employees but also the region. Thermo Fisher has more than 2,300 employees across 42 locations in India, including research and development centers, distribution hubs, and manufacturing sites.
For a global company like GE, the situation in India, where it has thousands of employees, is also a reminder of how slow and uneven the recovery will be, making it difficult for major businesses like its jet engine division to bounce back quickly.
“The US [is] clearly coming back. China [is] above where they were a year ago,” Larry Culp, CEO of the Boston company, told investors on an earnings call last week. “But certainly, other parts of the world, as you well know, are still fighting this horrible pandemic.”
Chakravorti, The Fletcher School dean, said the United States can’t afford to dismiss what’s happening in India. The country thought it had the pandemic under control after a long and economically painful lockdown that began in March 2020.
“The lesson here: Do not get complacent,” he said. “We have a big chunk of this country that is still not vaccinated.”