Stock Groups

Omicron COVID-19 variant poses risks to global growth, inflation

© Reuters. Protective suits worn by travellers are visible at Soekarno Hatta International Airport. This is because the country has banned the entry of travelers who have visited eight African countries in order to stop the spread of Omicron, a new variant of coronavirus.

Kanishka Singh

(Reuters) – Omicron COVID-19 could cause global economic slowdown and increase prices, according to rating agencies Fitch Ratings, Moody’s Investors Service, (NYSE:). This comes after the World Health Organization declared that this variant carries a very high chance of infective surges.

According to Elena Duggar of Moody’s Associate Managing Director, “The Omicron variation poses risk for global growth and inflation,” Reuters received emailed comments from Duggar.

According to Duggar, the variant will also be in high demand for holiday travel and other spending seasons.

If the variant changes global market risk appetite it could cause financial stress for debt-issuers who have high financing requirements. She said that emerging markets countries, such as those in Asia and Africa, could face increased refinancing risk if they rely on borrowing from international markets.

Fitch Ratings stated separately that Fitch Ratings was not ready to include the Omicron coronavirus variation’s effects in its economic growth projections, until it is more clear about its severity and transmissibility.

Fitch indicated that although we think that another major, coordinated global downturn is unlikely, inflation may complicate macroeconomic responses to the new variation.

The two-year economic crisis that has engulfed the world for nearly two years was reflected in more closed borders by countries on Monday. According to industry sources, big airlines quickly took action to defend their hubs, limiting passenger travel from South Africa. This was in fear that the new variant could spread and cause additional restrictions for other countries.

U.S. President Joe Biden encouraged Americans not to panic. He said that America was working closely with pharmaceutical companies to develop contingency plans in case of new vaccines.

Biden declared that while the nation would not go back into lockdowns for winter 2018, he urged everyone to get vaccinated, to use boosters, and to wear masks.

Omicron was first discovered by South African scientists in the hands of an infectious disease specialist. Although it is too soon to know if it causes more severe symptoms, it does seem to be more transmissible.

Duggar said that the Omicron version may spread even with restrictions on international travel based upon past experience.

“Should another wave of COVIDs be created by the new variant, those economies with higher vaccination rates, greater dependency on tourism and lower capacities to provide fiscal and monetary policies support will be most affected.

Disclaimer: Fusion MediaWe remind you that this site does not contain accurate or real-time data. CFDs are stocks, indexes or futures. The prices of Forex and CFDs are not supplied by exchanges. They are instead provided by market makers. As such, the prices might not reflect market values and could be incorrect. Fusion Media is not responsible for trading losses that may be incurred as a consequence of the use of this data.

Fusion MediaFusion Media or any other person involved in the website will not be held responsible for loss or damages resulting from reliance on data including charts, buy/sell signals, and quotes. Trading the financial markets is one of most risky investment options. Please make sure you are fully aware about the costs and risks involved.

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.