Recently, the World Health Organization (WHO) officially announced the discovery of a worrisome new variant of the coronavirus. This new variant, in addition, already has a name and is known as Omicron. The reasons given by the WHO Technical Surveillance Committee There are several to classify this new strain as worrisome, but the main one is that there is evidence of a significant number of mutations in the virus. These mutations could facilitate its transmission – even among vaccinated people – and also increase in severity the symptoms of the already known coronavirus.
This event caused a great alarm around the world; many countries implemented South Africa travel restrictions –Country where this variant was first discovered–, the world financial markets were painted red, having the most important losses in a year and a half and ending the bullish or upward trend that we had observed since the beginning of the vaccination and the first concrete signs of global economic recovery. Both stock markets and bond prices slumped, while the US dollar appreciated against most currencies.
The question to be answered is: how will this new variant impact economies? The first thing to mention is that we still have very little information on this strain, that is, the degree of uncertainty surrounding the potential effects on health and the economy of entire countries is very high. We do not know with certainty where it originated, or if in fact it causes more severe symptoms than previous variants such as Delta, the predominant variant at this time. There is also no information about the effectiveness of our arsenal of vaccines against Omicron. Just last week, the director of Moderna, one of the most recognized pharmaceutical companies in the battle against COVID-19, stated that it is highly likely that current vaccines will not be as effective in this case and that, consequently, a new vaccine will have to be developed.
What is clear is that, as with Delta, this new variant with a large number of genetic mutations will spread globally. This uncertainty has raised doubts about the possibility that we will see, once again, restrictions on mobility and isolation measures that could reverse the weak economic recovery of previous months. For now, financial volatility will continue and measures will have to be taken to compensate for this loss of confidence in the markets.
If, for example, a significant number of countries decide to adopt new social distancing measures, economic recovery and job creation will lose steam, so we will see even higher inflation rates. Let us again imagine restrictions on factories, airports, ships and other means of transport in the current conjuncture of global supply chain disruption. With new confinements, the demand for goods will increase, putting pressure on the prices of everything we consume, the demand for services will decrease, seriously affecting a universe of companies that have not yet managed to recover pre-pandemic levels of income, and consequently, neither of employment. .
Lower growth and higher inflation They will put the world’s already hasty central banks in a difficult situation. They must act at the first sign of rising inflation expectations. However, monetary policy has its limitations, and in this case, the best public policy in favor of the health and economy of the countries should be the increase in the percentage of the population vaccinated.
It is no coincidence that variants like Delta or Omicron have arisen in countries with low levels of inoculation. In this sense, it is more than evident that developed countries and also countries with large stocks of vaccines – such as Mexico with more than 40 million doses in warehouses – accelerate donations to vulnerable countries. The coronavirus will not cease to be a threat to any country until it ceases to be a threat to all.
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