Qatar National Bank Explains Why Omicron Headwind Is Both Temporary And Limited
It has been more than two years since the pandemic was first discovered. And ever since then, the economy has been confronting new waves every time the COVID-19 virus has mutated and evolved through a new variant, Omicron being the recent one.
Though with evolving and emergence of new variants, humanity's responses have also evolved, the aftermath of the pandemic suffered by the economy cannot be overlooked. It has been one of the most influential synchronized recessions the world has faced since world war II since early 2020.
Qatar National Bank (QNB) recently explained why pandemic acted as headwinds to global economic recovery and why it's both temporary and limited.
Recommended Read: Global Economic Health Is On Its Way To Recover
Here's what they had to say.
First, the recent Omicron variant is far more contagious than the previously detected variants. This simply signifies the vaccines generated to tackle the earlier variants won't be that efficacious for Omicron as it doesn't target this particular variant.
For instance, the defense from two dosages of the Pfizer-BioNTech vaccine against any symptomatic condition has dropped below 40 percent. So certainly, it is suitable to state that vaccines haven't been that efficacious for the Omicron variant.
Second, the variant has hit the core of the economy. When the variant arrived in Europe and North America, it was the festive season; hence, traveling and indoor gatherings were at their peak. Hence the two regions witnessed a surge in the cases, compelling them to tighten restrictions to prevent over-burdening the healthcare industry.
What made the situation worse was that these two regions have the largest consumer service sectors and were the biggest contributors to the global GDP, which are most vulnerable in such scenarios.
Although QNB expects the impact of Omicron began in the fourth quarter of 2021 to continue in the first quarter of 2022, they still believe the economic headwind to be both limited and temporary. Furthermore, considering that Omicron is relatively less severe than other variants and that the vaccines are slightly effective for the variant, it can be concluded, the economy might not be that severely impacted as it was in the case of the delta variant.
Besides the surge of restrictions by the government to control the spread and formulation of continued vaccination drives to help reduce the emergence of new cases, certifying the restrictions might be lifted later in the year.
As a result, QNB expects modest downward revisions and a slight impact of Omicron in 2021 to be partially offset by the stronger activity of 2022.