Omicron COVID-19 variant poses risks to global growth and inflation rating agencies

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Travelers wearing protective suits are seen at Soekarno Hatta International Airport, as the country bans the arrival of travelers who have traveled to eight African countries to curb the spread of the new Omicron variant of the coronavirus, in Tangerang , near Jakarta, Indonesia, November 29, 2021. REUTERS / Willy Kurniawan

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Nov. 29 (Reuters) – The Omicron COVID-19 variant could hurt global growth prospects while pushing up prices, rating agencies Fitch Ratings and Moody’s Investors Service said on Monday, after the World Health Organization stated that the variant carried a very high risk of infection. surges.

“The Omicron variant poses risks to global growth and inflation, especially since it comes during a time of already strained supply chains, high inflation and labor market shortages,” said to Reuters Elena Duggar, Associate Managing Director at Moody’s.

According to Duggar, the variant is also expected to hit demand over the next vacation and spending season.

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“If the new variant affects the risk appetite of the global market, it would put additional financial stress on debt issuers with significant financing needs. For example, countries in emerging markets that depend on borrowing in international markets may face increased refinancing risks, ”she said.

Fitch Ratings has said separately that it is too early to incorporate the effects of the Omicron coronavirus variant into its economic growth forecast until more is known about its transmissibility and severity.

“We currently believe that another large synchronized global slowdown, like the one seen in the first half of 2020, is highly unlikely, but rising inflation will complicate macroeconomic responses if the new variant takes hold,” Fitch said.

More countries closed their borders on Monday, casting a shadow over economic recovery from the two-year pandemic. Major airlines have acted quickly to protect their hubs by restricting passenger travel from southern Africa, fearing that a spread of the new variant could trigger restrictions on other destinations beyond immediately affected regions, said. industry sources said. Read more

US President Joe Biden urged Americans not to panic and said the United States is working with drug companies to develop contingency plans if new vaccines are needed.

Biden said the country will not return to lockdowns this winter, but urged people to get vaccinated, get their boosters and wear masks.

An infectious disease expert from South Africa, where scientists first identified Omicron, said it was too early to say whether the variant was causing more severe symptoms than previous variants, but it seemed be more transmissible.

Experience from past variants suggests that, even with some restrictions on international travel, the spread of the Omicron variant can be difficult to stop, Duggar told Reuters.

“If the new variant were to lead to another growing wave of COVID infections, the hardest hit economies will be those with lower vaccination rates, higher reliance on tourism, and less ability to offer budget support and monetary policy to offset the impact of the new wave on growth. infections. “

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Report by Kanishka Singh in Bangalore; Editing by Andrea Ricci

Our standards: Thomson Reuters Trust Principles.

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