Omicron - The Economic and Market Impact

With Omicron cases surging worldwide, we’ve gathered key coverage from across our services about the strain’s economic and markets impact.

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See our COVID Macro Monitor for the latest data on the Omicron’s spread and  economic impact. 

Key Research

Omicron arrives
China Economics (14 January 2022)
As more Omicron outbreaks spring up, we look at what’s driving Beijing’s commitment to a ‘dynamic clearing’ (zero-COVID) strategy.

Further thoughts on Omicron’s economic effects
Global Economics (13 January 2022)
We’ve cut our Q4 2021 and Q1 GDP growth forecasts. Activity should bounce back quickly, but the inflation implications are more worrying.

COVID Recovery Monitor
Global Economics (6 January 2022)
Monthly publication providing a global view of the pandemic and its economic impact.

Omicron won’t cause euro-zone to contract in Q1
Europe Economics (6 January 2022)
Why the euro-zone could see activity fall in January but rebound in February.

Australia – Omicron will add to upward pressure on inflation
Australia & New Zealand Economics (6 January 2022)
Reports of panic buying and supply shortages suggest more price pressures, reinforcing the case for QE ending next month.

Omicron absenteeism a temporary economic threat
US Economics (5 January 2022)
Even without fresh restrictions, more than 2% of the US workforce could now be isolating, representing a supply-side hit across the economy.

The latest on South Africa’s Omicron experience
Africa Economics (5 January 2022)
In December, our EM team noted relatively low Omicron cases in South African ICUs, despite the strain’s increased transmissibility. Here their latest on the economic impact.

A catch-up on COVID
UK Economics (5 January 2022)
Surging Omicron cases will weigh on UK growth at the start of this year, even if the government can avoid imposing more restrictions.

Restrictions may not derail Bank’s tightening plans
Canada Economics (21 December 2021)
Closures in Quebec are likely to be followed by other provinces but a smaller economic hit than in previous waves means rates could rise in Q2.

Winter virus wave to slow economic momentum
US Economics (21 December 2021)
Chartbook shows surging cases in Northeast, which could be a sign of things to come.

PMIs: Virus hits services; further signs of shortages easing
Global Economics (16 December 2021)
December Flash PMIs show meaningful signs of easing shortages but also show Omicron adding to the pandemic’s negative impact on activity.

December looking dismal, but lockdown the real risk
UK Economics (14 December 2021)
Forecasts at risk as consumers spend more time at home, but the real threat to GDP is another lockdown.

Omicron lessons from South Africa
Africa Economics (13 December 2021)
Early evidence suggests a more transmissible but less severe variant, with little apparent hit to the economy (so far).

Omicron to stay MPC’s hand, but won’t prevent 2022 lift off
UK Economics (9 December 2021)
We’ve pushed the first BoE rate hike to February from next week, though the 2022 outlook depends on whether tougher restrictions will be imposed.

New variant unlikely to derail recovery
UK Commercial Property (9 December 2021)
Omicron would mean only a slight hit to yields and capital values but, either way, the sector faces a tougher 2022.

Norges Bank to hike as planned, despite Omicron
Nordic & Swiss (9 December 2021)
Meeting previews discuss how Norwegian and Swiss central bankers are grappling with the uncertainties around the new variant.

There’s room for more fiscal support if needed
Global Economics (9 December 2021)
If the Omicron situation got that bad, markets would likely tolerate ramped up fiscal spending. Politics would be the key constraint.

Omicron poses near-term downside risk to property recovery
European Commercial Property (9 December 2021)
Quarterly outlook explains how Omicron is another complication facing a sector already grappling with weaker growth and supply issues.

Assessing the market reaction to Omicron so far
Global Markets (3 December 2021)
Markets have been generally risk-off since news of Omicron broke. But moves within government bonds, equities and corporate credit are revealing.

Omicron could add to inflationary pressure
Australia & New Zealand (3 December 2021)
Here’s how the virus could bring forward the first RBA rate hike.

Omicron, tourism and the oil market
Middle East (2 December 2021)
Outside the Gulf, economies are vulnerable from low vaccine rates and reliance on tourism. Within the Gulf, oil prices pose downside risks to growth.

How big a threat is Omicron to Asia?
Emerging Asia (2 December 2021)
The region has relatively more fiscal and monetary headroom to react if things get worse, while exporters could benefit.

Renewed restrictions: inflationary or disinflationary?
Global Economics (1 December 2021)
Omicron could be disinflationary in the near term, but tighter restrictions could end up worsening shortages.

The impact of Omicron on EM trade
Emerging Markets (30 November 2021)
For now, tourism is the most obvious EM pain point, but oil producers could be vulnerable too. For Asian exporters, this could mean more orders.

Omicron puts demand back in the spotlight
Commodities Overview (29 November 2021)
The potential demand impact of this new strain is another reason we’re downbeat on most commodity prices in 2022.

Omicron: implications for the euro-zone
Europe Economics (29 November 2021)
The euro-zone could see a big impact on growth but only a small one on inflation. The ECB could also be even more cautious about tightening.

The Omicron variant and the threat to EMs
Emerging Markets (29 November 2021)
Identifying which parts of the emerging world would be vulnerable to a more virulent strain.

Omicron – The risks to GDP and for the BoE
UK Economics (29 November 2021)
Downside risks to growth and a greater chance the Bank delays a rate hike but economic activity is less vulnerable to lockdowns than before.

Omicron fears stall plans to reopen borders
Emerging Asia (29 November 2021)
Latest chart book explains how Omicron deals a fresh blow to the region’s tourism sector.

Omicron’s stark reminder that the global economic recovery hinges on the pandemic
Chief Economist’s Note (29 November 2021)
Neil Shearing’s weekly blog presents a framework for thinking about Omicron.

First thoughts on Omicron impact
US Economics (28 November 2021)
More downside risks and less likelihood the Fed speeds up tapering.

COVID throws another curveball
FX Markets (26 November 2021)
In light of Friday’s market turmoil, this explained why the dollar could continue to fall against safe-haven currencies.

Recoveries trembling under new virus variant threat
Africa Economics (26 November 2021)
The economic implications of Omicron for Southern Africa, where it was first detected.

Video: The Omicron strain – The economic and markets impact
(26 November 2021)
With news of Omicron just a few hours old, senior economists from across our services held a Drop-In to run through possible impacts.

First thoughts on Omicron
Global Economics (26 November 2021)
Our preliminary take on the news of a potentially more virulent strain, including markets impact and policy responses.