We have not reached the post-pandemic. The Omicron variant came to show it. Its appearance in South Africa is the consequence of having neglected the delivery of vaccines in Africa, as well as good news for some companies in the pharmaceutical sector and bad omens for almost everyone else. The warning lights are rekindled in the tourism sector. It will be a stone for the recovery and, most likely, it will have an inflationary impact. This means upward pressure on interest rates from the Fed.
Before the Ómicron, we talked about the fourth wave and the risks of not having reached the vaccination goals, in Mexico or in the world; from the coordination and logistics problems to support the poorest countries … from the difficulties of some developed nations to “convince” the anti-vaccines.
We are still in Coronanomics territories. This means that some of the main investment and consumption decisions are determined by what happens on the medical and public health front. This will be reflected in the main figures for economic activity and will modify the forecasts for 2022. Less growth and more inflation await us. This is so because we have uncertainty at the center of the stage. We know about the variant of the virus that it produces symptoms of fatigue, which has already reached the American continent, but we are ignorant of many things, including its lethality and the effectiveness of known vaccines. Not having precise answers produces the type of doubts that hits the markets and affects the mood of consumers and investors. Not everything is mist or darkness. There is good news from Hong Kong, where they found a way to isolate the virus, four days after its discovery.
We do not know what will happen with the pandemic but it is better to be realistic and rule out the possibility of a miracle happening. It is clear that some countries will have more difficulties in the face of a more complicated reality. They are those with low vaccination rates, those with little fiscal room for maneuver, and those with a high dependence on the tourism sector in their economy. Mexico is in the zone of turbulence because in these three variables the lights go on on the board.
The world is on alert. Israel has put very severe limits on the entry of travelers. Europe is making progress in implementing measures that will restrict the mobility of the unvaccinated. China is making it clear that it will not shake its hand to impose tougher restrictions. There are three ways of dealing with the covid, which are observed by the rest of the world. Mexico has been a reference and it is obvious that we need to work differently to have better results. We are one of the countries that has managed the pandemic worst, say the statistics of deaths and some international reference institutions, The Lancet magazine and the University of California. We are also one of the countries that suffered a greater economic impact in the pandemic, considering the aggregate of 2020 and 2021 we will have a negative balance of 2 or 3 points of GDP.
Are we back in the scenario we live in 2020? Clearly not. We have the vaccines and a great deal of knowledge about what the virus is and what we can do to “live” with it. Also some lessons learned in economic policy. We will not return to the massive closure of companies and perhaps not to the general confinement of people in their homes.
What will happen to inflation? This is one of the great differences compared to the first months of the pandemic, where we experienced a general decline in prices, including negative values for oil. Now we have bottlenecks and dislocation of value chains. Problems in the American job market because there are not people to fill thousands of available positions. A more contagious virus will put more stress on value chains and the job market. In all likelihood, there will be more inflationary pressures. They will be global and will come from outside. When the world gets the flu, Mexico … doesn’t get a cold.
Editorial Director General of El Economista
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Degree in Economics from the University of Guadalajara. He studied the Master of Journalism in El País, at the Autonomous University of Madrid in 1994, and a specialization in economic journalism at Columbia University in New York. He has been a reporter, business editor and editorial director of the PÚBLICO de Guadalajara newspaper, and has worked for the newspapers Siglo 21 and Milenio.
He has specialized in economic journalism and investigative journalism, and has made professional stays at Cinco Días in Madrid and San Antonio Express News, in San Antonio, Texas.
Reference-www.eleconomista.com.mx