Omicron setback may delay economic recovery by 6 months: Expert

By Ovunc Kutlu

ANKARA (AA) - As global financial markets await proof that COVID-19 vaccines are effective against omicron, the new variant becoming more widespread could delay an economic recovery by six months, an expert said Tuesday.

"If vaccines prove to be effective against omicron and it doesn’t lead to further restrictions and lockdowns, I think we’ll see record highs again soon [in markets]," Craig Erlam, London-based senior market analyst for UK & EMEA at trading platform OANDA, told Anadolu Agency via email.

"Whereas any setback on that front could delay the recovery by six months, maybe longer depending on how the inflation dynamic unfolds," he added.

In the US, annual consumer prices climbed to 6.8% in November, bringing inflation to its highest level in almost 40 years. The annual inflation rate in Germany stood at 5.2% in November, its highest since June 1992.

On the coronavirus front, the UK saw its first death due to omicron on Monday when 10 people were in the hospital with the variant as the number of cases in the country is doubling every few days.

Erlam said there is a significant amount of unknowns on the coronavirus front that may create dramatically different situations in global markets depending on the outcome of the virus.

University of Oxford researchers said Monday that two doses of the Pfizer-BioNTech or AstraZeneca COVID-19 vaccines are less effective against omicron compared to previous variants.

Financial markets around the world have seen high volatility during the two weeks following Nov. 26, when the omicron variant was first announced.

Due to high fluctuations, the US stock market saw massive losses for the week ending Dec. 3. The Dow Jones Industrial Average saw a weekly decline of 0.9%, while the S&P 500 and the Nasdaq fell 1.2% and 2.6% for that week.

The following week, they saw gains, while the S&P 500 closed at a record high of 4,712 points Friday.

In the US, however, at least 30 states and Washington, D.C. have confirmed omicron cases as of Monday, according to reports.

This created further uncertainty among investors and downward pressure on US stock indexes, with the Dow shedding 0.89%, the S&P 500 losing 0.91%, and the Nasdaq plummeting 1.39% at the final bell.

Fears over omicron hit riskier assets harder.

Bitcoin lost 7.5% on Monday after plummeting 8.26% on Dec. 4 -- a week after omicron was announced.

The crypto market's total value fell some $200 billion on Monday after $520 billion evaporated on Dec. 4.