We know the human cost of Omicron, but what does this next wave of Covid mean for the world economy?
The experience of previous lockdowns gives us a clue to the way the world will respond at an economic level, explains Hamish McRae
How will the world get through this one? Just at the moment when everyone – governments, companies, people – seemed to glimpse a calmer economic outlook, suddenly the uncertainties and horrors have come back to beat us up. We do not yet know the medical implications of the wave of infections from the Omicron variant, but we are already very aware of the impact on our daily lives as countries clamp down on visitors, opening hours and rules of behaviour.
And there is more to come. Joe Biden will make a speech on Tuesday, issuing a “stark warning” to Americans. Britons have been warned that further restrictions are quite possible. Across Europe the clampdown has tightened, and will tighten further. In human terms it is miserable, whatever view one takes of the necessity of the measures, but what might all this mean in economic terms? Some points.
The first thing is that in aggregate terms the world economy is basically back to where it was before the pandemic struck in March 2020. Overall it probably is a bit ahead, for the two largest economies, the US and China, are both above their previous peaks. Europe, taken as a whole, may be a bit below the level of February 2020, as Germany does not look to be there until the first quarter of next year, and both Italy and Spain have been falling short. The UK may be there already, and the all-important services sector was at the end of September, though the past weeks have been disappointing, to put it mildly.
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