Global markets saw its worst day in more than a year, oil prices tumbled nearly $10, and countries hastily closed their borders as panic gripped the world in the past two days after the World Health Organisation (WHO) expressed its concern over a newly-discovered coronavirus variant, which it has named ‘Omicron’.
We still do not know much about Omicron. It was first discovered in South Africa but subsequently moved to other Southern African countries and a few others outside the continent.
The WHO said that the new variant “may be more transmissible than other forms” such as the Delta variant, responsible for the massive spike in Covid-19 cases earlier this year. “Preliminary evidence” suggests there is an increased risk of “reinfection”, WHO officials said.
Fragile economic recovery
The news led to fears that Omicron, like Delta, could lead to a surge in infections, eventually resulting in a setback to a world that eagerly hopes to return to normality as cases declined and vaccination succeeded relatively in checking the virus. The panic, seen at the weekend, could also deal a significant blow to the still-fragile global economic recovery.
But is this massive panic attack justified? We are not sure. Two main things lead to the prevailing anxiety. The Dow Jones Industrial Average fell almost 1,000 points, the worst decline in more than 13 months. The Dow, considered a gauge of the US economic health, was followed by markets all over the world, including the oil market, which saw the worst sell-off since April 2020.
Sell off in the markets
Omicron could have very well been just a trigger to sell off in a market that has been overpriced for months. The Dow and other indices have for months been ripe for a correction because they have been more than 30 per cent overvalued for a good part of this year.
Secondly, the WHO was superfast this time to raise an alarm about the still-unknown variant. Let us not forget that WHO was criticised heavily last year for its slow response to the initial Covid-19 outbreak.
The first cases were reported in November 2019 but WHO officials only acknowledged the serious nature of the virus four months later. Determined no to repeat last year’s disastrous mistake, WHO seems to want to be ahead of the curve this time. We will surely find out in the next few days and weeks if WHO officials jumped the gun this time.
Meanwhile, caution is the key. Not panic. People need to keep their guard up — continue to wear your face mask, avoid as much as possible crowded places and watch out for symptoms. And don’t forget your booster shot.
