GlobalRapidly rising case numbers, fuelled by the Omicron variant, have once again dampened hopes that the COVID pandemic would shortly come to an end. In the meantime, lingering supply-side bottlenecks, still-high inflation and fading policy support are further derailing expectations for global growth next year. Against this backdrop of gloom is there anything about the global economic scene at present to be positive about?
In the spirit of the current holiday season we'd suggest the answer is yes. In what follows we offer five specific reasons to be a little more cheerful about the outlook than some of the more gloomy commentators might suggest.
1. The Omicron variant does not (yet) to appear to be as harmful as prior strains
The first reason concerns the Omicron variant. To be sure the emergence of that variant is clearly inflicting some damage to global economic activity via stricter social distancing measures, ebbing mobility and heightened consumer fear. However, although Omicron case numbers in South Africa have surged in recent weeks, there has not yet been as much follow-through (yet) into hospitalizations relative to previous strains. What's more there has even less follow-through so far from hospitalizations to fatalities (see chart below). The same is true incidentally from an analysis of other countries that have seen a surge in Omicron cases (e.g. the UK).
It's still far too soon to draw strong conclusions from this but at face value – and at present - this suggests that this strain of the virus, while more contagious, may not be as harmful as previous strains.
Figure 1: South Africa has seen far few hospitalisations and fatalities from Omicron relative to prior strains