The appearance of a new variant of Omicron amid rapidly increasing inflation rates in many countries is putting pressure on the world economy's recovery, which may face great obstacles.

So far, information on the Omicron variant is relatively mixed. Experts warn that the new variant is much more infectious than Delta.

If this is the case, countries that have opened up almost completely and are being hit by a new wave of Covid-19, typically Europe and the US, will be severely affected, even though according to preliminary clinical data. First, the toxicity of Omicron is somewhat milder.

What scripts are waiting for?

It is too early to specifically assess the effects of the new variant. The Organization for Economic Co-operation and Development (OECD) forecasts that the world economy will continue to recover but may lose momentum and become more imbalanced.

After a sharp increase of 5.6% in 2021, global growth will accelerate at a pace of 4.5% in 2022 and slow down to 3.2% in 2023, OCDE emphasized.

However, Omicron can throw these numbers off-topic.

The new variant "will add an element of uncertainty to what's already there, which could create a threat to the recovery," OECD chief economist Laurence Boone said.

Factors of concern include supply disturbances, high inflation and the permanent impact of the pandemic, all of which represent enormous challenges. Newly released economic data shows that most major economies are facing soaring inflation.

In Germany, the consumer price index increased by 5.2% in November compared with the same period last year, a record since 1992. Production costs in the country increased by 18.4% in October, which nor has it been seen since the advent of modern statistical systems, that is, since the 1950s.

In the US, October inflation increased by 6.2% year-on-year, the highest level in 31 years.

Authorities in different countries assess the risk Omicron poses. While US President Joe Biden said the new variant was "reason for concern, but not panic" and there was no need for new restrictive measures, the Chairman of the US Federal Reserve Bank (Fed) ) Jerome Powell believes that Omicron is associated with "many threats to jobs and economic activity."

Japanese Prime Minister Kishida Fumio again has "a strong sense of a new crisis."

In France, Finance Minister Bruno Le Maire stressed that "growth should not be worried," but the president of the Association of Employers (Medef) said businesses should "generally mobilize" to prevent the influence of Omicron.

If unfavorable news related to Omicron appears, leading to the return of international and domestic travel restrictions, the world economic recovery process will certainly be severely affected.

Didier Arino - president of the travel consultancy Protourisme - warned that a new crisis will begin when the US decides to close the border again and other countries also erect border fences.

Many major international financial institutions have in turn issued warnings about the combined impact of Omicron, the new wave of Covid-19 and the above factors.

Goldman Sachs has made up to 4 assessments with assumptions of mild economic activity, sharp decline, "false alarm" about Omicron in case this variant is less dangerous than the Delta variant, until The ability of the new variant to spread is stronger but the virulence is reduced, making the epidemic gradually return to normal.

As a result, in the first scenario, global growth would decline by 0.4% in 2022.

And Oxford Economics - a major British research agency - makes a very gloomy forecast: if Omicron becomes a dominant and more virulent variant than Delta, limiting the effectiveness of the vaccine, global growth in 2022 is only to 2.3%, 50% of the current forecast.

According to Capital Economics, if tightening measures are implemented this December and maintained until March 2022, the hypothesis is likely to come true, the Eurozone economy has just regained 100% of pre-pandemic levels, risk a return to the 95% level, leading to a new recession.

The International Monetary Fund (IMF) is also expected to downgrade its global growth forecast as the new variant is likely to dampen confidence.

Urgent reactions

So far, such bad scenarios have remained purely theoretical.

According to Sven Jari Stehn, a banking expert at Goldman Sachs, "there are many reasons to believe that this year's economic shock is much easier to deal with than last winter," mainly because every time there is a new wave , the impact of restrictive measures to prevent Covid-19 on the economy has decreased.

On the other hand, the current coverage of vaccines is already relatively wide, allowing the world to temporarily live with the pandemic and avoid having to impose large-scale blockade measures like 2020.

A positive signal is that the world oil price on December 6 increased again after a week of sharp decline due to the easing of concerns about the Omicron variant, plus the world's leading oil group Aramco decided to increase the selling price. out.

However, that does not mean that the concerns have subsided, because inflation and Omicron variation are still concerns of all countries.

Medical staff take samples to test for Covid-19 for people in New York, USA. Photo: VNA

“The world and financial markets are facing a great risk of a combination of economic stagnation and high inflation,” said Marc Touati, economist and president of ACDEFI, a consulting firm.

“The paradox of this situation is that central banks can fall into a trap of their own making: if they stop printing more money, they will exacerbate the stagnation, but if they continue,” he said. If they continue to maintain the policy, they will push up inflation."

Many recent steps show that the reactions of the economies are very different. Fed officials have expressed concern about Omicron's ability to continue to disrupt global supply chains and continue to fuel inflation in the US.

Fed Vice Chairman James Bullard has called for swift action in the face of inflationary pressures. This is the latest signal that the Fed intends to continue the policy of massively reducing economic stimulus implemented since the beginning of the pandemic until now, despite the risks that Omicron may pose.

China, although not very concerned about the direct impact of implementing the "Zero Covid" strategy, but the risk that Omicron poses to the global recovery is likely to threaten growth, due to the economic The country's economy is heavily dependent on exports.

The Central Bank of China has decided to cut the reserve requirement ratio, indirectly injecting about $180 billion more to support the economy in the face of major challenges.

Meanwhile, European Central Bank President Christine Lagarde said that the eurozone "knows its enemy well and what measures to take," and affirmed that Europe is "better equipped" to deal with the crisis. risks due to a new wave of epidemics.

She also stated that she did not intend to raise the benchmark rate next year, saying that the current inflation situation was only a temporary setback, but left the door open to the possibility of acting quickly if necessary to contain prices. growing too fast.

Compared with large countries, emerging economies are under much greater pressure. The Omicron variant can add to the difficulty right at a time when most countries suffer from inflation and are affected by the US tightening of monetary policy, causing the local currency to depreciate rapidly.

Most central banks have responded to the inflation risk by quickly raising interest rates, but that hasn't been enough for the local currency to appreciate again.

According to economic consulting firm Agefi (France), although growth continues to be positive in 2022, exporting countries of oil and gas and raw materials will benefit from rising prices, emerging economies will still be affected. China's economic outlook slows and the new variant will complicate the epidemic situation, given the relatively low vaccination rates in most of these countries.

In general, the world economic growth is facing the double pressure of inflation and epidemic.

Travel restrictions could exacerbate supply shortages, bottlenecks in production chains and international trade. The combination of rising prices and falling growth is likely to lead to an undesirable "scenario" of the economy, which is inflation with recession.

Theo TTXVN