International Credit Rating Agencies: "Omicron Intensifies Inflation... Negative Impact on Growth Outlook"

[Photo by AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] International credit rating agencies have warned that the COVID-19 Omicron variant poses a risk of damaging global economic growth prospects and driving up inflation.

According to major foreign media on the 29th (local time), Moody's diagnosed that Omicron is becoming a new risk to global economic growth and inflation amid ongoing supply chain disruptions, rising prices, and labor shortages burdening the world economy.

Moody's predicted that Omicron could negatively affect consumer demand during the year-end travel and shopping peak season. It also foresaw that if Omicron increases market risk aversion, the financing of emerging market countries reliant on overseas borrowing could face higher risks.

Moody's analyzed that countries with low vaccination rates, high dependence on the travel industry, and limited fiscal and monetary policy capacity would suffer the most damage if Omicron spreads.

Credit rating agency Fitch also stated that since research results on transmissibility and other factors are not yet available, it is premature to predict the economic impact of Omicron; however, if Omicron spreads, it could trigger inflation and complicate macroeconomic responses.

Fitch, however, expects that so far, Omicron is unlikely to cause a global economic downturn similar to that in the first half of last year.