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Monday, January 24, 2022

Omicron May Confuse Fragile Economic Recovery

LONDON – This week, Marisha Wallace finally had to admit that her planned five-day ski vacation in Switzerland in mid-December could not be saved: the sudden decision by the Swiss government to impose a 10-day quarantine on some international travelers meant she would not be able to leave her hotel or return home to London by regular flight.

“This is the world now,” said Ms. Wallace, actress and singer. “You can’t plan anymore.”

This temporary condition, exacerbated around the world, has left a still fragile economy on hold as a surge in coronavirus infections and a new variant of Omicron has erupted around the world.

“It’s impossible to know how bad it will be,” said Angel Talavera, head of European economics at Oxford Economics.

The forecasting firm sketched three scenarios, including one that predicts no discernible impact on economic growth, and one that is severe enough to be cut in half next year. It will be several weeks before there is more clarity, Oxford concluded.

The current round of restrictions has already cut travel and eroded consumer confidence. A virulent, vaccine-resistant strain could put the economy back on track, while a mild strain could free health systems and allow recovery to return to normal.

Although growth has been uneven, the global economy has recovered faster and stronger this year, the Organization for Economic Cooperation and Development report released Wednesday showed. than expected. The report, compiled mainly prior to the latest coronavirus news, nonetheless warns that growth is projected to slow: in the eurozone to 4.3 percent next year from 5.2 percent in 2021; and in the United States – up to 3.7 percent in 2022 from 5.6 percent.

The organization described its views as “cautiously optimistic”. But he confirmed how the economic condition is inextricably linked with the coronavirus: “The priority of economic policy is to vaccinate people,” the conclusion says.

Indeed, the threat to Omicron’s economic recovery is just the latest in a series of zigzags the global economy has experienced since the coronavirus swept across continents last year. The virus has repeatedly shattered hopes that an easing of the pandemic would normalize daily life and trade.

Even before this latter variant was discovered, a fourth wave of infections turned Europe into a Covid hotspot and triggered new restrictions such as isolation in the Netherlands and Austria.

In previous outbreaks, trillions in government aid have helped quickly revive the troubled economies of the United States and Europe. It also caused some unexpected side effects. Combined with deferred demand, this support caused labor and material shortages and rising inflation.

Given how much debt has accumulated over the past 18 months, such aid is unlikely to be repeated, even with a sharp downturn – like massive plant closures. Vaccines provide some protection, and many people say they don’t want to hibernate again.

Both people and business went into a wait-and-see attitude. “A lot of things seem to be on hold, like making decisions about the job market or overall consumption,” said Nick Bunker, director of economic research at Indeed.

How this will affect unemployment and inflation is unclear. Jerome H. Powell, chairman of the Federal Reserve, said Tuesday that concerns about persistent inflation are on the rise. The OECD also warned that inflation could be higher and last longer than originally thought.

Omicron’s appearance only adds to the ambiguity, the organization’s chief economist, Lawrence Boone, said in an interview.

“If this is something we can deal with, such as the virus we still have, it could prolong supply chain disruptions and it could take longer to clear inflation,” she said. But if the new option triggered wider blackouts and eroded confidence, she added, it could reduce spending spree and slow price increases.

In recent days, governments have responded with a confused jumble of stringent warnings, travel bans, travel bans and testing rules that have further darkened the economic outlook. This patchwork response, combined with people’s varying tolerance for risk, means that, at least in the short term, the latest deviations of the virus will have vastly different effects depending on where you are and what you are doing.

In France, Luna Park, an annual one-month amusement fair held in the southern city of Nice and opening this weekend, was canceled after the government suddenly requisitioned a huge warehouse containing roller coasters, shooting galleries and carousels. were set up to transform the facility into an emergency vaccination center.

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“Today I’m trying to save my company and I’m not sure if I can,” said Serge Payon, owner of the park. He feared he would incur huge losses, including the € 500,000 (about $ 566,000) he had already invested in the event, as well as refunds for tickets that had been on sale for several months.

Payon laid off 20 employees. Another 200 festival workers who traveled from across the country to host 60 games and attractions were ordered to stay at home.

“It has been a disaster for a year and a half,” said Mr Payon. “And now it starts again.”

Israel’s decision on Saturday to close its borders to all foreign tourists for two weeks is likely to cut the number of tourists in Israel and the occupied territories in December this year to 40,000, or nearly 60 percent of what the government estimates. …

Wyatt F. Bowers, a city planner, planned to leave Jacksonville, Florida for Tel Aviv on Wednesday, but had to cancel – for the fifth time in 18 months when he had to cancel a planned trip to Israel. He will overbook but doesn’t know when.

Overseas tourism, which brought a record 4.55 million tourists to Israel in 2019, has all but disappeared. From March 2020 to September 2021, non-resident foreigners were banned from entering Israel – and, accordingly, into the occupied territories, where entry and exit are controlled by Israel.

In Bethlehem, where tourism is the main industry, revenue fell more than 50 percent, Mayor Anton Salman said in a telephone interview.

Elias al-Arjah, head of the Arab Hotel Association, which represents about 100 Palestinian hotels in the occupied territories, said he was worried not so much about the short-term impact of the sudden travel ban as the long-term message of the unpredictability of it. sent to potential visitors.

“The disaster is not the kind of groups that were canceled over the next two weeks,” said Mr Al-Arja. “How can I convince people to come to the Holy Land after we promised them that you can come, but then the government closes the border?”

A reluctance to travel, however, could mean an upswing in other sectors if the new option isn’t as harmful as people fear. Jessica Moulton, a senior partner at McKinsey & Company in London, said previous spending patterns during the pandemic showed that some of the money that people would otherwise use to travel would instead be spent on meals.

She estimates that roughly $ 40 billion saved by British consumers on travel last summer was spent on shopping and eating out.

For now, according to Ms. Moulton, “to the extent that Omicron cuts travel, which happens when we head for Christmas, restaurants benefit.”

In Switzerland, where travelers from the UK and 22 other countries must now be quarantined, the policy change has an immediate impact on hotels.

“The majority of travelers from England – 80 to 90 percent – have already canceled their reservations,” said Andreas Züllig, head of HotellerieSuisse, a Swiss hotel association.

Ms Wallace, who canceled her trip to the Cambrian Hotel in Adelboden, was one of several people who changed their hotel reservations after the Swiss government made its announcement on Friday, just a week before the slopes opened.

“This is obviously affecting our very important winter and Christmas business,” said Anke Locke, Cambrian manager, who estimated that 20% of December hotel bookings were at risk.

At the moment, however, most guests are watching and waiting, said Ms Locke. We have changed their booking from guaranteed to advance booking.

Extreme uncertainty about the economy may be the only certainty.

Patrick Kingsley provided a reportage from Jerusalem, Melissa Eddie from Berlin and Leontine Gallois from Paris.

World Nation News Deskhttps://www.worldnationnews.com
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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