The Delta Variant halt in economic recovery


The emergence of the Delta variant has diminished our hope for a smooth post-pandemic recovery.  Not only in India or the U.K., nearly all U.S. states are seeing new case numbers surge at least 10% higher than the previous week, according to John Hopkins University’s data.

This two times more transmissible variant is raising the prospect of further lockdowns and travel restrictions by leading an alarming uptick in coronavirus cases around the globe, further delaying the estimated recovery period on travelling. The prospect of another lockdown is also bringing the consumer sentiment to a lower point as it posed a big threat to the beaten global economy. 

It is not hard to see that the Delta variant has added a lot more uncertainty to the economic outlook, and raised the risks to the downside. Not only is it causing more people to get sick faster and more deadly, it can also exacerbate the all time high inflation by causing supply chains to take a longer time to normalize and catch up with demand. Amplifying the supply chain constraints and scramble the global supply chain even more.

As the resurgence of the coronavirus continues to confound the expectations of policy makers and investors, the market has remained nervous about the threat to global growth and the potential monetary policy in order to curtail this possibly more lethal and vaccine-resistant variant.

On the contrary, economists including David Kelly, chief global strategist at JP Morgan Funds argues that the resurgence will not derail the recovery but dampen the inflation talk. Though that is not the way everyone wants it, the Delta variant could definitely ease the growing consumer prices by taking some of the steam out of the economic comeback. 

While human science has not fully controlled the situation of this public health crisis, it is hard for us to predict how everything will pan out in the near future, given the situation that another mutation is highly possible. 

Do you think governments around the world will introduce more lockdowns in order to soften the blow or re-open everything as usual? Will the economy go into another tailspin or the Delta fears are overheated?