Asia economists cautiously optimistic even amid Omicron fears, China slowdown
- New Covid-19 variants are expected to continue triggering new localised restrictions, with a China slowdown also raising concern
- But higher vaccination rates and smaller waves of infection are boosting Asia’s resilience, and the RCEP is likely to inject new trading activity, analysts say
Earlier this week, Nomura analysts Thanatcha Juruku and Umang Parekh told investors in a research note if the Omicron coronavirus variant wreaked havoc, local hospital revenues could soar but businesses in the medical tourism industry could suffer in light of possible lockdowns.
These views captured in a nutshell the new pattern of business cycles in Asian and global economies in the pandemic era.
New Covid-19 variants will continue to trigger fresh lockdowns and widespread hospitalisations and in the case of Thailand, likely repeating scenes of chaos that pummelled a strained medical system earlier this year.
What follows would inevitably be a curtailment of production while disruptions also would send trading supply chains into a tailspin. For the tourism-dependent Asian region, new variants would also further stifle small to medium firms.
Constraints on the supply chain, which cause shortages of goods and raw materials across the region, would continue to drive up the price of those goods at a time inflation is already hurting many Asian economies, from China to Sri Lanka.
The only caveat to Omicron’s impact on economies is that no one knows how destructive it is, yet.
This week, the Economist Intelligence Unit (EIU) offered a promising view about the impact of Omicron.