The appearance of the COVID-19 Omicron variant is creating shockwaves through the global economy and resurrecting fears of lock down, drastic travel restrictions, further dampening of the consumer confidence and extensive damages to the already weakened supply chains. A virulent, vaccine-resistant strain could indeed send the economy into a tailspin, while a mild one could leave health care systems unburdened and allow the recovery to get back on track.
On December 1, the Organization for Economic Cooperation and Development (OECD) released a report indicating that the world economy in 2021 had bounced back more quickly and strongly than anticipated. The report, compiled largely before the latest coronavirus news, indicated that growth was projected to slow down but remain strong: in the eurozone, to 4.3% next year from 5.2% in 2021; and in the United States, to 3.7% in 2022 from 5.6%. The report in its conclusion highlighted how much economic fortunes were inextricably tied to the COVID evolution. All of the above would be true depending on how societies and economies adapt to the new reality of a constant COVID threat.
This leads me to make a few observations and comments:
- COVID is here to stay. The virus will continue to mutate and threaten our very existence. The mitigation lies in a combination of annual vaccination campaigns (like the flu) and the development of drugs to help combat the infection once declared
- The herd immunity does not work. As a consequence of inequalities in vaccination geographically and the evolving nature of the virus, herd immunity will (probably) never be achieved.
- Administrations are going to be tempted to impose vaccination on their populations (as Germany recently announced) at the risk of antagonizing further the pro and anti-vaccine, to spare their health systems and beyond, the vitality of their economies
Full vaccination rates in early December stand at 59.6% in the US, with Michigan lagging slightly behind at 54.9%, and France is at 70.1%. Our societies will soon have to decide on how to manage COVID as a permanent threat, balancing individual liberties with the necessities to protect our populations while keeping the economy afloat.
Looking forward into 2022, with hope and optimism, I wish you all a wonderful holiday.
Cédric Ballarin
