The OECD said the mutated Omicron threatens to intensify imbalances that slow growth and increase inflation, and delay the global economy’s return to normal.
The Paris-based international organization made up of largely wealthy countries has warned that monetary policy makers must be “cautious” given the new strain of the virus, and that the most urgent need is to speed up the rollout of coronavirus vaccines.
Lawrence Boone, chief economist at the Organization for Economic Co-operation and Development, told the Financial Times that the Omicron variable “adds to the already high level of uncertainty and could pose a threat to the recovery, delaying a return to normality or something worse”.
The OECD noted that the global recovery has been much stronger than it initially expected in 2021, but said this has now led to a series of devastating disruptions that could continue for much longer than expected.
“We are concerned that the Omicron mutant will increase the high levels of ambiguity and risks, and this may pose a threat to the recovery,” Boone said while presenting the organization’s report in Paris.
He added that vaccinating more people remains the most important priority to end the pandemic, as well as confront the imbalances that hinder recovery.
Bonn explained that vaccinating all the peoples of the world costs 50 billion dollars, which is a small number compared to the 10 trillion dollars that the Group of Twenty spent to reduce the economic impact of the Corona pandemic.
Most industrialized countries are moving away from the expected growth path before the Corona pandemic, but low-income countries, especially those with low vaccination rates, face the risk of falling behind.
The organization expects the global economy to grow by 5.6% this year and 4.5% next year.
The organization also expects the global economy to slow slightly in 2023, growing by 3.2%.
After signs of global economic recovery in the last few period with the increase in vaccination rates, the new Corona mutant “Omicron” surprised the world, threatening the recovery that everyone has dreamed of since the end of 2019.
After the economic meltdown in 2020 and the start of recovery in 2021, will there be a global slowdown in 2022? The recovery was characterized by momentum, but the global economy is not immune from upheavals due to the supply crisis, inflation and health concerns, to which are also added the requirements of preserving the environment.
Multi speed recovery
From China to the United States and from Europe to Africa, the pandemic almost simultaneously brought the world’s economies into a tailspin in the spring of 2020. After two years and five million deaths, the way out of the crisis has become even more uncertain.
Rich countries benefited from privileged access to vaccines: the US erased the effects of its worst recession since the Great Depression of the 1930s, and the eurozone could have done the same at the end of the year despite concern about the rapid spread of the fifth pandemic wave and the discovery of the mutant omicron.
Rating agency Moody’s warned that “Covid-19 will remain a threat.”
The threat has already emerged in regions with low vaccination rates such as sub-Saharan Africa where only 2.5 percent of the population was vaccinated as of early October, which, according to the International Monetary Fund, is doomed to experience the slowest recovery.
The International Monetary Fund expects until 2024 that most emerging and developing countries will fail to meet the growth forecasts they set before the pandemic. Especially since a number of central banks (in Brazil, Russia, South Korea, etc.) have raised interest rates to stave off accelerating inflation that would hamper their recovery.