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What are the implications of the outbreak of the mutant Omicron on the global economy?

Much work remains to be done with some sectors booming and others being hit by the “brutal” effects of the virus.

While new waves of epidemic outbreaks due to the omicron are looming on the horizon, the global economy has generally returned to the level it was in before the virus first struck in March 2020.

This is what British economic writer and analyst Hamish McRae considered in an analytical article for him in The Independent newspaper (Independent) British, and said that in general, the situation appears to be a little better for the two largest economies in the world, the United States and China, while the indicators of European countries combined are slightly below the level of February 2020, as Germany is likely to remain below this level until the first quarter of next year and that Italy and Spain fail to reach it.

The UK seems to have already reached that level where its very important services sector reached the end of last September, and the last few weeks have been disappointing.

Although the global economy as a whole has recovered well – the writer adds – it was not at all where it should have been if there was no pandemic in the first place, and a lot of work is still waiting in light of the prosperity of some sectors and the exposure of others to the “brutal” effects of the virus.

The experience of the impact of previous lockdowns gives us an idea of ​​how the world will deal economically with the next threat, and the next three months will generally see a halt in the recovery paths, which will cause technical recessions in many major economies (recessions are defined by the presence of two consecutive quarters of negative growth ).

Germany is already on the brink of a recession, partly because of the problem of supply shortages, with expectations that the situation will get worse during the first quarter of next year.

Omicron’s Economic Fallout

But what is more interesting than the general progress – according to the author – is the change in the shape of the economy, which will have several repercussions next year, most notably 3.

The first effect is that supply chain problems will lead to an increase in the volume of local production, and there are thousands of examples of this around the world, the second effect is that labor markets will remain very narrow with a shift in power that occurs almost once a generation between workers and employers The third and final effect is that inflation has reached unprecedented levels in nearly a generation.

The first two elements – if all other indicators are taken into account – are considered “good news”, as the new economy will be different from the old economy in support of local jobs and equivalent to the labor force. As for the third element, i.e. rising inflation, it will not be so, especially since we do not know how long it will take It is up to the central banks to address the problem of inflation nor the levels of interest rates that would be required to do so.

Together, these data bring us – the writer concludes – to a final idea that the global economy has already proven to be very resilient, which means that the recovery path will stop temporarily, but it will not get out of control for a long time, and the greater the blow during the next few months, the greater the scope of the rebound later, and once Finally, the epidemic recedes, and the West will witness a legacy of high inflation that it did not know before, but we must first strive to achieve this regression.



Reference-www.aljazeera.net

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