Posthaste: ‘Long Covid’ — Global business sentiment turns negative for the first time since the height of the pandemic – Financial Post

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The Omicron variant has taken a toll on global business sentiment, with executives worried about the resurgence of the virus and its debilitating impact on supply-chain issues.

“For the first time since the height of the pandemic, a majority of respondents have become more negative on the month,” according to a new Oxford Economics survey published Monday. “Supply-chain concerns have also increased.”

The survey of 120 businesses, including some of the world’s largest companies, conducted shortly after the emergence of the new Omicron coronavirus variant, finds the C-suite in knots over the new scare.

A majority of businesses view risks slightly skewed to the downside (53 per cent, up from 50 per cent in October’s quarterly survey) or heavily to the downside (2 per cent, down from 7 per cent). Only a relatively small proportion of businesses (12 per cent) see risks as to the upside, Oxford Economics said.

The sentiment echoes comments from Kristalina Georgieva, International Monetary Fund managing director, on the prospect of slowing global growth next year. In October, the IMF had forecast the global economy to grow 5.9 per cent in 2021, before easing to 4.9 per cent in 2022 — now that forecast could be lowered further.

“A new variant that may spread very rapidly can dent confidence, and in that sense, we are likely to see some downgrades of our October projections for global growth,” Georgieva said during the Reuters Next conference earlier this month.

A Bloomberg study suggests a more contagious and deadly variant would be a drag on the global economy, with even a three-month return to the toughest 2021 restrictions pulling growth back to 4.2 per cent in 2022 — a pullback from its earlier projection of 4.7 per cent GDP growth.

Inflation is another worry gnawing at business executives surveyed by Oxford Economics.

Around 62 per cent of the executives think inflation will peak around the first or second quarter of 2022, but 18 per cent believe high inflation would remain an issue well into the second half of next year.

Supply-chain snarls also remain a headache, especially if new variants continue to slow down recovery and disrupt freight and passenger movement.

“Businesses attach a relatively high weight to downside scenarios, seeing around a 1-in-5 chance of weaker global growth on the back of supply-chain disruption throughout 2022 and a similar probability of a ‘long Covid’ scenario in which new virus variants result in a protracted period of public health restrictions,” the Oxford survey noted.

Source: https://financialpost.com/executive/posthaste-long-covid-global-business-sentiment-turns-negative-for-the-first-time-since-the-height-of-the-pandemic

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