COVID-19: Rapid spread of Omicron variant puts brakes on global economic recovery, says UN

The rapid spread of the novel variant of COVID-19 has slowed the global economic recovery, contradicting the evidence of good growth at the end of last year, according to the UN's key report on the global economy, released on January 13. The decline is likely to continue into the next year. According to the 2022 World Economic Situation and Prospects (WESP) report., following a 5.5% increase in 2021, supported by substantial consumer spending and some investment, with goods trade exceeding pre-pandemic levels, global output is expected to grow by just 4% in 2022 and 3.5% in 2023.

With WESP urging for better targeted and coordinated policy and financial measures, UN Secretary-General António Guterres stated at the report's launch that it is time to close the inequality gaps within and among countries. He stated, "If we work in solidarity – as one human family – we can make 2022 a true year of recovery for people and economies alike."

New waves of COVID-19 infections, persistent labour market, lingering supply-chain constraints, and rising inflationary pressures are among the issues cited in the UN Department of Economic and Social Affairs' (UNDESA) 2022 WESP report. The United Nations Department of Economic and Social Affairs' Under-Secretary-General Liu Zhenmin emphasised the importance of a coordinated, long-term global response to COVID-19, including universal vaccine access, and warned that without it, the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the world economy.

Developing or poor countries suffer the most

According to the analysis, developing or poor countries will be hurt harder in the long run than affluent countries. In comparison to pre-pandemic estimates, growth in Africa, Latin America, and the Caribbean is expected to be much lower, resulting in increased poverty and slower progress on sustainable development and climate action. The number of people living in extreme poverty is expected to stay substantially above pre-pandemic levels, with poverty in the most vulnerable economies expected to climb even more.

In Africa, the absolute number of people living in poverty is expected to rise until 2023. Richer countries' economies, on the other hand, are predicted to recover almost completely by next year. The extraordinary financial measures put in place by the nations across the world, since the pandemic, such as bailouts, greater social protection, and job support, should be maintained, according to the report, to ensure a healthy recovery. However, as inflation rises, several central banks are beginning to unwind their enormous monetary reaction to the crisis.

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