Skip to main content

Global Economic Growth Drops Below 1% in Omicron-Led Slowdown

The European Union might be at higher risk of an economic fallout caused by the spread of omicron.

The pace of the global economic recovery dropped below 1% in the quarter ending in December, a sharp 50% decline from the previous quarter, as the fast-spreading omicron variant arrived, according to a news report by Bloomberg.

The world economy grew 0.7% in the October to December quarter, with the U.S. economy expanding marginally faster at 1.2% as 2021 draws to a close.

Arch rival China's economy grew 4.5% this quarter, but slower than the 4.9% forecast earlier.

In the new world order, the European Union will be under stress, Bloomberg reports. As will emerging economies like Brazil, Russia, South Africa and India, the report added.

The pace of growth in the EU has slowed from November to December. It is growing at a slower-than-forecast 0.8% in the fourth quarter, according to estimates from Bloomberg "nowcasts," a real time aggregator of GDP growth across economies of the world.

TheStreet Recommends

"As 2021 draws to an end, the global economic recovery risks being thrown off track by the omicron variant of the coronavirus,” Tom Orlik, chief economist for Bloomberg Economics told the news agency. “Particularly Europe looks vulnerable: Recoveries for Germany, France and Italy are increasingly under strain from the surge in cases.”

The economy of Japan was also weaker in December compared to November, Bloomberg reports.

Brazil has slumped to 0.2% growth at the end of the second year of living in a pandemic.

Only three Western nations including U,S., Canada and the United Kingdom have witnessed growth in this uncertain period.

Inflation continues to surge in the U.S., but the Federal Reserve has signaled three rate increases in the next year. The central bank on Dec. 15 also said that it would double the tapering of its $90 billion stimulus.

The Bank of England last week raised interest rates for the first time since the coronavirus pandemic.