Omicron may impact APAC economic recovery: Moody’s Analytics

New Delhi: Low vaccination rates against the Covid-19 disease in Asia-Pacific countries, including India, may add to the existing risk to the recovery of the economy, according to a new analysis by Moody’s Analytics.

Countries including India, Myanmar, Laos, Indonesia, Hong Kong, Thailand, the Philippines and Vietnam have so far vaccinated less than 65 per cent of their populations (12 years of age and older). This also includes all of sub-Saharan Africa, where rates remain below 50 per cent, and 60 countries globally with rates below 20 per cent.

“The new Omicron variant illustrates the existing risk to the global economy from regions or individual countries that have low vaccination rates,” wrote Steve Cochrane, Chief APAC Economist at Moody’s Analytics, in the analysis titled as ‘Much to Learn About Omicron-Fast’, on Sunday.

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Policymakers in these countries “must respond to Omicron by accelerating vaccination programmes”, he added.

Last week, the World Health Organisation (WHO) classified the latest variant B.1.1.529 of SARS-CoV-2 virus, with the name Omicron, as a “Variant of Concern” (VOC), which means it could be more contagious, more virulent or more skilled at evading public health measures, vaccines and therapeutics. First detected from Botswana, in Africa, it has since spread to various countries in Europe, including Belgium, the Netherlands, France and the UK, as well as in Asia Pacific regions — in Australia and Hong Kong.

Cochrane noted that Omicron will also likely impact the travel and tourism industry, which is expected to be one of the slowest components of the economic recovery in the Asia-Pacific region.

“Much of Southeast Asia, particularly the Philippines and Thailand, depend highly on the industry for growth… will travel lanes continue to be opened between select countries? … This remains uncertain”.

Further, policymakers in the APAC region should accelerate the capacity of public health systems to accommodate all who may need treatment in a future Covid wave, Cochrane suggested.

“Such investment would be critical in minimising any new social distancing measures if a new wave arrives,” Cochrane said.

While the Omicron variant of Covid-19 “adds new measures of uncertainty to the outlook for the global economy”, the risk “will depend on its speed of transmission, virulence, associated rates of hospitalisation and death, and also the effectiveness of vaccines and antiviral medications against it,” Cochrane noted.

It will, however, take scientists at least two more weeks to understand the new variant and the severity of infections it poses, Cochrane said, adding that “Omicron reminds us that the global economic recovery remains tethered to the pandemic”.

“We are broadly assuming that there will be new waves of infections, but that each wave will be less disruptive to the healthcare system and economy than the previous one. We assume that the Omicron variant is consistent with this assumption. If the variant turns out to be more contagious, virulent, and disruptive to the economy, we will need to revise our economic outlook,” Cochrane said.

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