Omicron Poses Risks to Global Growth and Inflation: Rating Agencies | News on the coronavirus pandemic

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More countries closed their borders on Monday, casting a shadow over economic recovery from the two-year coronavirus pandemic.

Omicron’s COVID-19 variant could hurt global growth prospects while pushing up prices, ratings agencies Moody’s Investors Service and Fitch Ratings said on Monday, after the World Health Organization said the variant was at very high risk of infection flare-ups.

“The Omicron variant poses risks to global growth and inflation, especially as it comes during a time of already strained supply chains, high inflation and labor market shortages,” he said. Moody’s associate chief executive Elena Duggar told Reuters in emailed comments.

The variant is also likely to hit demand during the upcoming travel and vacation spending season, according to Duggar.

“If the new variant affects the risk appetite of the global market, it would cause additional financial stress for debt issuers with large funding needs. For example, emerging market countries that depend on market borrowing. international organizations may face increased refinancing risks,” she said.

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

“We currently believe that another significant, synchronized global slowdown, such as that 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 and more countries closed their borders on Monday, casting a shadow over the economic recovery from the two-year pandemic. Major airlines moved quickly to protect their hubs by limiting passenger travel from southern Africa amid fears a spread of the new variant could trigger restrictions from other destinations beyond the immediately affected regions, it said. indicated industry sources.

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

Biden said the country would not return to shutdowns this winter, but urged people to get their shots, 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 caused more severe symptoms than previous variants, but it appeared to be more transferable.

Experience with 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 news agency.

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

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