We were doing so well. And then, the Omicron variant reared its ugly head. Since its discovery, this evasive mutation of COVID-19 has been shaking up the global economy.
Everywhere it has gone, infection rates have been soaring, with one line graph after another doing their best impression of a vertical rocket launch.
But as more info came out, things calmed down. So instead of sustaining a crash, the Dow Jones onlylost 6% in November 2021. Since then, this index and others have recovered their losses and then some. But like all the other strains of COVID, Omicron will make its mark on the global economy.
What can we expect in the coming months? Who will lose and win? In this article, we’ll explore these issues in greater detail.
The Rise of Omicron and its Impact on the Global Economy
When Omicron was first discovered in November 2021, it sent shock waves through the global community. After all our sacrifices, the new variant, with some of the scariest mutations to date, threatened to undo everything.
The key mutations enabled this virus to do what many in the scientific community had feared – evade the immune protection of the vaccinated. Because of this, infection numbers didn’t soar – they went vertical.
This wasn’t just a “third world problem” – even in countries with the highest vaccination rates, infections went skyward.
Shortly after, news came out underlining this variant’s mildness. Because of this, another stock market crash was averted. However, with unprecedented infection numbers, the small percentage of “severe cases” was still expected to slam healthcare systems worldwide.
As a result, lockdown measures have returned in many jurisdictions. For example:
- Hong Kong has barred most foreigners from entering the territory.
- In Ontario, Canada, public health orders have shuttered schools, bars, and gyms.
- After infections soared, authorities in Peru imposed a new nightly curfew.
All these events will have significant effects on the global economy. Below, we’ll dive deeper into the losers and winners of the Omicron wave.
Which Sectors Will Be Hurt by Omicron?
With the uncertainty returning, many business sectors are bracing for the worst. Here are a few of the most affected so far:
Since the pandemic started, this industry has taken the worst beating. For instance, according to the UN World Tourism Organization (UNTWO), international arrivals plunged by 74% in 2020. Compare that with a 4% drop during the worst of the Global Financial Crisis.
The total cost? In all, the UNWTO estimated that tourism operators collectively lost 1.3 trillion USD in 2020. However, things had begun to improve through 2021, as vaccines spread throughout the world and confidence slowly returned.
But with Omicron, some barriers have been re-erected. Take Thailand, for example – after launching the Test and Go scheme in November 2021, they suspended it in late December.
Looking ahead, it appears that Omicron will greatly slow the reopening of tourism. Officials, hopeful that vaccines would end the pandemic, will now have to adjust to the reality of a COVID-endemic world.
Health and Wellness
As with other strains of COVID, Omicron is an airborne virus. But unlike the others, it has enormous infectious potential, with initial reports stating that it is 70x more infectious than Delta.
As such, many health departments have again shuttered gyms, spas, and sporting facilities. And even in areas where businesses are open, many people are staying away.
However, not all health & wellness businesses are singing the blues – those offering “at home” solutions may see a surge in business. While some have already bought gear for home-based workouts, this latest lockdown may push others to finally invest in their own gym.
In a COVID-endemic world, the event business has become an erratic one. It has two fatal weaknesses – it often requires people to gather indoors en masse, and it requires these folks to plan their attendance in advance.
Because of this, event planners have lost tremendous amounts of money during the pandemic. For example, in just the first three months of 2020, event planners worldwide had already lost 16.5 billion USD.
With Omicron, the same headaches have returned. However, many businesses have managed to adjust to the realities of this new era. And if Omicron is the final act of COVID, pent-up demand could lead to a banner year in 2023.
Which Sectors are Expected to Benefit from Omicron?
So things are looking pretty grim. But every black cloud has a silver lining – for every sector harmed by Omicron, others will thrive. These are a few of the sectors expected to boom:
In response to the pandemic, governments and the pharmaceutical industry significantly increased their spending on medical countermeasures. For example, in the U.S., Operation Warp Speed provided over 19 billion USD to the pharmaceutical industry to produce vaccines and treatments for COVID.
And the output has been nothing short of spectacular. Since then, three of the ten WHO-approved vaccines have come out of American labs, and numerous antivirals like Paxlovid have been green-lighted for use by the FDA.
With the rise of Omicron, new drugs and vaccines are assured. In addition, the unique genetic profile of this variant has prompted firms like Moderna to begin work on a tailored vaccine. And the hunt for super-effective antivirals will continue, with riches virtually guaranteed for the first successful product.
The COVID pandemic has shown that many countries are woefully unprepared for major health crises. And it appears we haven’t learned much in the past two years, as hospitals are once again overcrowded in the Omicron wave, and front line healthcare workers are getting exhausted.
However, in crisis comes opportunity. As COVID becomes endemic, something will need to be done about the state of our healthcare system. And so, it’s likely we will see the building of dedicated COVID facilities, complete with surge capacity and specially-trained, well-compensated staff.
COVID-related economic turmoil has also led governments to spend lavishly on public works projects. All levels are getting involved – for example, London launched an infrastructure investment package worth 1.5 billion GBP. And in the US., Congress recently passed a 1.85 trillion USD infrastructure bill.
Because of this, small publicly-traded firms may benefit. But before investing, check these tips on penny stocks to ensure you are informed.
To Prosper Post-COVID, Investors Must Stay Ahead of the Curve
Life isn’t fair. In any economy, some sectors will thrive, while others will struggle. But in this current environment, these differences are magnified. So it’s important to not to be reactive – instead, we must get better at reading trends and determining what they mean for the future.
To be clear: this isn’t easy, as even well-regarded experts get things wrong. But by heeding these signs properly, astute investors stand the best chance to thrive in 2022 and beyond.