With omicron, the world economy sees the opportunity to overcome COVID-19

Governments around the world are relaxing quarantine rules, reviewing controls by the coronavirus and reducing emergency aid from the time of the pandemic, in an attempt to return their economies to a certain normality.

The measures, motivated by the less seriousness of the omicron variant and the need to keep workers employed and the global recovery on track, have been a blast of optimism that has pushed up oil and stock prices.

Health experts say the rapid spread of the variant may herald a turning point in the pandemic.

However, they add, much depends on how authorities manage ongoing vaccination rollouts and balance other health measures still needed, while persuading their citizens not to be careless.

“We are taking a big step and that also means we are taking a big risk,” Dutch Prime Minister Mark Rutte said last week before shops, hairdressers and gyms reopened after a partial lifting of the lockdown. despite a record number of new cases.

Lockdown was already a rarity, as most Western countries are now out of that phase and are focused on how to continue to open safely.

About half a dozen countries have cut quarantine time from 10 to five days, citing omicron’s faster infection cycle as a reason for loosening rules that have led to a wave of worker absences at companies.

Britain and Israel have eased requirements for follow-up testing as rising omicron infection rates overwhelm labs. Media outlets have said the UK could announce a further easing of restrictions later this month.

Omicron’s ability to spread rapidly through the population without causing a proportional increase in hospitalizations and deaths has led the Spanish Prime Minister to suggest that it be treated as an endemic disease, like the flu.

living with the virus

Although few use the word, monetary policymakers, whose priority now is to strip economies of the cheap money that fuels inflation, have begun to describe the coronavirus as something that businesses and households must learn to “live with.” ”.

“What we are seeing is an economy that is doing well through these waves of COVID,” US Federal Reserve Chairman Jerome Powell said last week.

“If the pundits are right and omicron is going to go through very quickly and peak maybe in a month and go down after that, I think you’re likely to see less hiring and maybe a lull in growth, but it should be short term,” he added.

The scenario would facilitate the Fed’s full turn toward monetary policy normalization this year, with up to three interest rate hikes. Other central banks that also intend to reduce stimulus share this opinion.

“It’s proving highly contagious, but less deadly, so economies will live with it,” said a European Central Bank official, adding that the bank’s baseline scenario assumed a “continued resolution of the health crisis in 2022.”

Similarly, the Bank of Japan, while listing omicron as a risk, sticks to its view that the local economy will continue a recovery driven by strong exports and huge government spending.

If these optimistic prospects materialize, governments could also begin to reduce emergency fiscal aid that, according to the International Monetary Fund (IMF), has caused the largest increase in global debt in a year since the Second World War.

In October, the IMF forecast global economic growth of 4.9% this year, while underlining the uncertainty posed by the coronavirus. The IMF has deferred the publication of new outlooks to January 25 to take into account the latest developments related to omicron.

continue vaccinating

The economic outlook is rosy and is based on the fact that vaccination campaigns are sufficient to limit serious diseases.

This means increasing access to vaccines in the developing world, while richer countries focus on boosters which, according to widespread evidence, such as in Italy and Germany, offer significant protection against the risk of hospitalization, intensive care and death.

Dutch hospitalizations for COVID-19, for example, although they have moved away from the pandemic’s all-time highs of around 2,000, are still above 900.

This is having an impact on absences from the workplace and care for other illnesses, and the Government hopes to rapidly increase the booster vaccination coverage rate, which is around 50% in adults and relatively low for children. euro zone standards.

Another obstacle to a return to normality may be China’s decision to implement a strict “COVID-zero” strategy, which is likely to lead to supply chain closures and thus affect its trading partners.

And while the belief that global recovery can live with omicron may be convenient, it may still collide with the hard facts of epidemiology.

Lawrence Young, Professor of Molecular Oncology at the University of Warwick, said US and Japanese studies showing more than 30% of cases remain highly infectious after five days suggest moves to relax quarantine rules could be counterproductive.

“This is a political decision based on the need to get people back to work,” he said. “…people coming back after five days poses the risk of highly infectious people going back to work or school.”

He and other experts said those risks could be mitigated through strict enforcement of lateral flow testing, mask wearing and limiting contact, a difficult health message to authorities perceived to be relaxing some rules.

“There’s a great sense that we’re coming out of all of this,” Young said. “But I think it’s an interesting period, and a dangerous one if people are too complacent.”