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Omicron Variant Poses Risks To Global Recovery: Moody's

Omicron Variant Poses Risks To Global Recovery: Moody's

The Omicron variant has injected new uncertainty, global rating agency Moody's said.

New Delhi: The new Omicron variant of Covid-19 poses risks to the global economic growth and inflation outlook, as concerns mount about the variant's health risks and several countries have imposed new travel restrictions in recent days, Moody's Investors Service has stated in its report.

"Just as many countries were moving to a semblance of post-pandemic normalcy, the Omicron variant has injected new uncertainty. However, the experience following the emergence of other variants, notably the Delta variant, and the public health policies put in place to counter successive waves of infections provide some basis for identifying the factors that will determine the economic and credit impact of this latest variant," the global rating agency said.

"Countries with an assured supply of effective vaccines and delivery systems, and high levels of public acceptance of the vaccines, will remain better positioned," it added.

Countries around the globe have announced restrictions and "compulsory isolation facilities" to contain the spread of this new Covid variant.

"The emergence of the new variant also comes during a period of fragile economic recovery, with stretched supply chains, elevated inflation and labor market shortages. Business disruption resulting from the spread of the new variant could prevent supply chain stresses from easing, dampening productive capacity and stoking further cost pressures in sectors with exposure to global supply chains," the agency further said.

It mentioned that "the hardest-hit economies will be those with lower vaccination rates, higher dependence on tourism and lower capacity to offer additional fiscal and monetary policy support to offset the growth impact of the resurgence in infections."