- Governments looking to ease curbs, dial back stimulus
- Economy “functions right through” COVID – Fed’s Powell
- Easing pandemic protocols risks creating complacency
- Omicron less virulent, but vaccination rollouts still key
- China remains a stand-out with “COVID-zero” policy
Governments worldwide are easing quarantine rules, reviewing coronavirus curbs and dialing back pandemic-era emergency support as they bid to launch their economies back into some version of normality, reports Reuters.
The turning point in the pandemic
The moves, motivated by the lower severity of the Omicron variant and the need to keep workers in work and the global recovery on track, have generated a whiff of optimism that has lifted oil and stock prices.
Vaccine rollout
Much depends on how authorities manage ongoing vaccination rollouts and balance other health measures still needed, while persuading their citizens not to throw caution to the wind.
“We are taking a big step and that also means we’re taking a big risk,” Dutch Prime Minister Mark Rutte said last week before stores, hairdressers and gyms reopened in a partial lifting of a lockdown despite record numbers of new cases.
Lockdowns
That lockdown was already something of a rarity, with most western countries well past that stage and focussed on how to safely open up further.
Around half a dozen have cut quarantine times from 10 to five days, citing Omicron’s faster infection cycle as grounds to loosen rules that have led to a wave of worker absences hitting businesses.
Living with the virus
While few are using that specific word, policymakers whose priority now is to wean economies off the cheap money fueling inflation have started to depict the coronavirus as something businesses and households must learn to live with.
“What we are seeing is an economy that functions right through these waves of COVID,” U.S. Federal Reserve Chairman Jerome Powell said last week.
“If the experts are right and Omicron is going to go through really quickly and peak perhaps within a month and come down after that, I think it is likely you will see lower hiring and perhaps a pause in growth, but it should be short-lived.”
Such a scenario would facilitate the Fed’s full-on turn towards normalising policy this year with as many as three interest rate hikes. Other central banks also looking to wind back stimulus share that view.
If that upbeat outlook materialises, governments would also be able to start winding back the emergency fiscal support which, according to the International Monetary Fund, led to the largest one-year surge in global debt since World War II.
In October, the Fund forecast global economic growth of 4.9% this year, while underscoring uncertainty posed by the coronavirus. It postponed the release of its latest outlook to Jan. 25 to factor in latest Omicron developments. read more
Keep on vaccinating
The rosy economic picture is also predicated on vaccination campaigns at sufficient levels to limit serious illness.
That means ramping up access to shots in the developing world as wealthier countries focus on the boosters that widespread evidence, including hard data from Italy and Germany, shows offer significant protection against the risk of hospitalisation, intensive care and death.
Another fly in the ointment for any early return to normal may prove to be China’s resolve to pursue a strict “COVID-zero” strategy likely to lead to shutdowns hitting supply chains and therefore its trade partners.
And while the belief that the global recovery can live with Omicron may be expedient, it may yet run up against the hard facts of epidemiology.
Lawrence Young, Professor of Molecular Oncology, University of Warwick, said U.S. and Japanese studies showing that more than 30% of cases remain highly infectious after five days suggest moves to relax quarantine rules could backfire.
“This is a policy decision …based on the need to get people back to work,” he said. “…Returning people after five days risks highly infectious people returning to work or school.”
He and other experts said those risks could be mitigated by strict enforcement of lateral flow testing, mask-wearing and contact-limiting – a tricky health message for authorities perceived to be easing up on some rules.
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Source: Reuters
