"Omicron May Impact Economic Growth More Severely Than Delta If Spread Is Faster"

On the 29th (local time), medical staff prepared to administer the Pfizer-BioNTech COVID-19 vaccine at a gym in Makati, a suburb of Manila, the capital of the Philippines. The Philippine government, following the previous day's ban on entry from South Africa, other Southern African countries, Austria, and seven European countries to block the spread of the COVID-19 Omicron variant, is accelerating vaccination efforts for citizens aged 12 and older. 2021.11.29 [Image source=Yonhap News]

[Asia Economy Reporter Hyunju Lee] Due to the impact of the new COVID-19 variant Omicron, there is a forecast that the global economic growth rate could drop by more than 0.4 percentage points in the worst-case scenario next year.

On the 28th (local time), according to Bloomberg News, Goldman Sachs stated in a report that "in a negative scenario where Omicron spreads faster than the Delta variant, the global economic growth rate in the first quarter of next year is expected to fall to 2%, which is 2.5 percentage points lower than our previous forecast."

In this case, the annual global economic growth rate for next year is also expected to decline by 0.4 percentage points to 4.2% compared to the current forecast. If the severity caused by Omicron is significantly worse than Delta, there are concerns that the global economic growth rate could suffer even more serious damage. On the other hand, if its transmissibility is lower than Delta, it is expected that there will be no significant impact on global economic growth and inflation.

Goldman Sachs also expressed hope that if Omicron is slightly more transmissible than Delta but causes less severe illness, the global economy might grow more than the current forecast.

Goldman Sachs explained that while Omicron is expected to have a considerable impact on economic growth, the actual effect can only be gauged once specific research results on Omicron are available.

Bloomberg reported that although some views suggest Omicron's impact may not be as severe as last year's recession, warnings are also emerging about the worst-case scenario of stagflation as countries reimpose economic lockdowns. Additionally, concerns are being raised about the decreasing policy tools available to governments worldwide to stimulate the economy amid the successive emergence of COVID-19 variants.