Another new name is roaming in the air, “Omicron”. Everyone fears the restrictive policies that were enforced during the past 2 years as economies barely started to recover from the repercussions of the 2019 pandemic. However, in late November 2021, the world was shaken by the news of the emergence of a new coronavirus mutation detected in South Africa. After preliminary data by the WHO classified the virus as highly transmissible, Governments started panicking and reinforced restrictive policies such as closing borders with infected countries and banning flights from and to South Africa as containment measures. Despite the restrictive measures, the variant has found its way through the world, and several cases were found in America, Europe, and Asia.
The current speculation of the world’s Real GDP’s annual percentage change by the IMF in 2022 is 4.9 compared to an annual percentage change of 5.9 in 2021, but it is expected to be lower after the Omicron news. In November, global manufacturing remained lackluster as supply and demand slowed down with the pandemic.
Decreased Demand for essential commodities and shortage in labor, decreasing production in the first quarter of 2022, is expected if there were another upsurge of lockdowns. Oil prices have fallen significantly as travel bans are being imposed with the news about the variant. The global CIPS Purchasing Managers’ Index (PMI) decreased slightly from 54.3 in October 2021 to 54.2 in November 2021, but as the Omicron spreads, the index is expected to decrease. Also, the average purchase prices increased according to 75% of the manufacturers surveyed for the calculation of the PMI.
Despite the worries that the virus has instigated, governments are highly prepared for any further complications that might occur, and the virus is handled wisely since it is not the first variant that the world hears about; such as the Alpha, Beta, Delta variants, etc. Governments considered the worst-case scenario of the virus’ severity where economic activities will be stymied and global economic growth will slow further; therefore, they immediately imposed restrictive policies before the economy is affected in real terms.
Markets are rebounding after the fears of the new variant fade. However, mixed signals are being sent from around the world about the Omicron. Some pharmaceutical giants suggest that a booster shot of the existing vaccines could provide sufficient immunity. However, estimates in the UK suggest that the Omicron cases double every 3 days which is worrying because the number of fully vaccinated is high relative to other countries, and the country has imposed restrictive measures regarding the wearing of masks. Also, a Japanese study indicated that the Omicron variant is 4 times stronger than the Delta variant. Meanwhile, other virologists believe that it is still early to have a holistic understanding of the variant, and the WHO acknowledged that the symptoms of the Omicron are milder than those of the Delta.
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