Howard Schneider, Mark John

(Reuters) – Governments around the world are relaxing quarantine restrictions, revising coronavirus curbs, and dialing back emergency assistance for pandemic-era victims in an effort to bring their economies back to normal.

These moves were motivated by Omicron’s lower severity and the necessity to keep workers in employment and the global recovery on track. They have created a glimmer of hope that has helped lift oil and stock markets.

Experts in health believe that the rapid spread of the variant could signal a pivotal moment in the pandemic.

They also said that much will depend on the way authorities handle ongoing vaccination rollsouts, balance health care measures, and persuade their citizens to not throw caution to one side.

Last week, Mark Rutte, the Dutch Prime Minister stated that “we are taking a huge step” and also said it meant taking big risks. Despite record-breaking numbers of cases in recent weeks stores and hairdressers were able to reopen with a partial lift of lockdown.

The lockdown of this nature was already rare. Many western countries have moved on to safer openings.

A half-dozen have reduced quarantine times to 10 to 5 days. They cite Omicron’s quicker infection cycle and have loosen regulations that led to an increase in worker absenteeism.

Following a lateralflow result that Omicron’s high infection rate overloads laboratories, Israel and Britain have relaxed their requirements for followup PCR testing. The local media reports that Britain might announce additional relaxations later this month.

Omicron’s speed in sifting through populations without creating an increase in deaths or hospitalisations was so impressive that Spain’s Prime Minister suggested it should be treated as an endemic disease like flu.

LIVING WITH VIRUS

While not many people are actually using the word coronavirus, policymakers whose goal is now to free economies from the inflation-fuelled cheap money have been describing the virus as something households and businesses must accept.

Jerome Powell of the U.S. Federal Reserve said that last week, “What we see is an economic system that functions right through these waves COVID.”

If the Omicron experts are correct, Omicron will go through very quickly, peak maybe within a month, and then come down, it is probable you’ll see lower hiring, perhaps a pause, in growth but this should only be temporary.”

This would allow Fed to fully turn towards normalising its policy and could lead to as much as three increases in interest rates. This view is shared by other central banks that are also seeking to reverse stimulus.

One European Central Bank policymaker said that Omicron is proving to be very contagious, but not as deadly as previously thought. He added that the baseline scenario for the bank assumed a “continual resolution of the crisis in the healthcare sector by 2022”.

The Bank of Japan is also stating Omicron was a potential risk but insisting on its belief that Omicron’s recovery will be driven by strong exports, massive spending, and robust domestic demand.

A positive outlook would allow governments to begin cutting back on the financial support that led, according the International Monetary Fund to the largest single-year rise in global debt ever since World War II.

While the Fund predicted global economic growth to be 4.9%, in October it highlighted uncertainty due to the coronavirus. To incorporate the latest Omicron developments, it delayed publishing its most recent outlook until Jan. 25,

VACCINATING IS KEY

A sufficient number of vaccinations is required to prevent serious illnesses from spreading. This will ensure that the economic outlook remains positive.

As wealthier nations focus their attention on the boosters with strong evidence (including data from Germany and Italy) that offer protection against death, hospitalisation and intensive care, this means they need to increase access to shots in the emerging world.

The Dutch COVID-19 hospitals have been hospitalized for example, even though the pandemic’s peak at 2,000 is still above 900.

This is causing workplace absences as well as acute care for other medical conditions. The government hopes to increase the booster shot coverage rate by around half of all adults. It is a relatively low figure, even by standards of the euro zone.

China’s determination to implement a strictly “COVID Zero” strategy, which could result in shutdowns of supply chains and trade partners, is another potential stumbling block to any quick return to normal.

While the idea that Omicron can be part of the global recovery may seem logical, the facts of epidemiology may prove it untrue.

Lawrence Young (Professor of Molecular Oncology at the University of Warwick), said U.S.-based and Japanese studies that showed more than 30% of cases remained highly infectious five days later suggest that easing quarantine rules might backfire.

He stated that this was a decision made on the basis of people returning to work. “…Three days after the event, highly infectious individuals could return to school or work.

Experts agreed with him that these risks can be reduced by strict enforcement for lateral flow testing and mask-wearing, as well as contact-limiting. This is a difficult message to send to authorities who seem to be relaxed on certain rules.

Young said that “there’s a huge sense that all of this is over,” It’s an intriguing, potentially dangerous time for those who are not careful.