Ómicron is less lethal, but reduces economic growth and wreaks havoc

I assured in this same space, last Wednesday, that “the omicron variant of the SARS-CoV-2 virus will cause health, economic and social havoc” and today everything indicates that this is happening.

Every day data is released showing how the new wave of the pandemic is affecting the economy of our country and the rest of the world.

Regarding Mexico, every day there are more analysts who estimate that GDP growth in 2022 will be lower than what was expected before the omicron emerged and that the optimistic 4.1% predicted by the Ministry of Finance will never be reached and Public Credit (SHCP).

The Organization for Economic Cooperation and Development (OECD) reduced its estimated growth of the Mexican economy for this year from 3.4% to 3.3%.

For some, even the OECD forecast is optimistic. Alonso Cervera, chief economist for Latin America at Credit Suisse, estimates that GDP will grow 1.8%. The same is the opinion of Citigroup’s chief economist for Latin America, Ernesto Revilla, while Carlos Capistrán, chief economist for Mexico and Canada at Bank of America, believes that growth will not reach 2%. Gabriela Siller, director of economic analysis at Banco Base, expects the economy to grow between 1.5% and 2.5%.

In other countries, GDP growth estimates are also being revised downwards as a result of the effects that the new wave of the pandemic is having on various economic activities.

In the United States there are those who are beginning to see it difficult for growth to reach the 4% predicted by the Federal Reserve. Goldman Sachs economist Jan Hatzius cut his forecast for GDP growth for the first quarter of this year from 3% to 2% and Oxford Economics estimates that if omicron continues to make more people sick, growth could fall below 2 %.

Regarding the increase in world GDP for this year, last October the International Monetary Fund (IMF) estimated that it would be 4.9%; However, the IMF itself warned that the appearance of the new variant will affect the global economy and it is expected that on January 25 it will release its new estimate after it has determined how serious the impact will be.

One sector seriously hit by omicron is the airlines, where due to the number of pilots, flight attendants and ground personnel who have fallen ill with COVID-19, flights have had to be canceled around the world. In the United States alone, from December 22 to January 10, just under 40,000 flights had been canceled.

Yesterday, January 10, it was already announced that 1691 would be canceled today, another 422 tomorrow, plus those that will be added to the list. Bad weather in some areas of the world has also contributed to a good number of cancellations.

In 2020 and 2021, US airlines laid off thousands of employees and lost $ 35 billion last year. Before the new variant emerged, they viewed 2022 with optimism and now they will have to lower their revenue and profit projections for the year.

Ómicron has been shown to be less aggressive and lethal than the original coronavirus strain and its delta variant; however, it spreads faster than these and wreaks havoc.

Let’s keep taking care of ourselves.

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