How Will Omicron Impact Global Recovery? Economists List 4 Possibilities

The imposition of travel restrictions will shake consumer and corporate confidence, likely limiting activity in some places just as the holiday season gets underway.

The omicron variant is dealing a blow to optimistic hopes that the world economy would enter 2022 on a firmer footing, potentially undermining plans by policy makers to focus on inflation rather than weak demand. .@WHO designates a new variant of concern "Omicron" detected in South Africa. While much is yet to be determined, this is another stark reminder to rapidly vaccinate the world. The pandemic is not over anywhere unless it is over everywhere. https://t.co/Q5uHPurY6qpic.twitter.com/W5jY5AiIwF

The imposition of travel restrictions will shake consumer and corporate confidence, likely limiting activity in some places just as the holiday season gets underway in many economies. Japan will effectively ban the entry of all foreign visitors as part of its plan to curb the virus spread, broadcaster NTV reported.

Markets moved swiftly to price in an economic blow. Expectations for interest-rate increases over the coming year dropped by at least 10 basis points on Friday for the central banks of the U.S., U.K. and Australia.

What comes next will be dictated by what scientists discover about the new covid-19 variant, including how resistant it is to vaccines and how more transmissible it is than the delta variant which raged in recent months without sending economies back toward recessions.