Covid scenarios—how will things play out with Omicron?

Omicron’s impact will depend on three factors, which are, by order of importance: its transmissibility (or ability to infect a huge number of people); its severity (or potential to fuel waves of severe cases and deaths); and its ability to evade immunity (obtained either by vaccination or prior infection). Here are three scenarios for how things could play out with Omicron.

Scenario 1 (probability 50%): Omicron is more infectious, but milder than Delta. Current vaccines prevent infection as well as they do with Delta, but severe cases become rarer than with Delta.

Synopsis: After an initial wave of panic, data show that Omicron is more contagious, but less severe than Delta, confirming the coronavirus’s transition towards endemicity. However, reassuring data on Omicron’s mildness will not be available before end-2021, leading to the reimposition of precautionary social distancing measures (but not full lockdowns) in many countries until early 2022. These measures cause disruption to manufacturing and logistics over this period, exacerbating existing bottlenecks in global supply chains. The situation starts to improve from January 2022, when scientists agree that Omicron is not a cause for concern and the milder variant replaces Delta globally. 

In this optimistic scenario, consumer and investor uncertainty starts to recede from early 2022, leading to an immediate rebound in financial markets and retail sales.

ana nicholls, director of industry operations

Impact: The impact on global growth and inflation is negative but small in the remainder of 2021. Omicron’s decreased severity compared with Delta means that the global recovery proceeds faster than we currently expect in 2022. Governments do not adjust fiscal policy, and central banks continue on their planned monetary tightening course.

Scenario 2 (probability 35%): Omicron is more infectious and as severe as Delta. Current vaccines do not prevent infection, but do reduce the risk of severe cases as well as they do with Delta.

Synopsis: It gradually emerges that Omicron is more infectious and as severe as Delta in late 2021. Real-world data confirm that current vaccines do not prevent infection, but they still reduce the risk of severe illness and death. Some developed countries, notably in Europe, impose lockdowns to protect healthcare systems from collapse. These measures, as well as widespread sickness, cause substantial disruption to manufacturing and logistics, and exacerbate supply-chain problems until late 2022. Vaccination becomes mandatory in most developed countries, fuelling social unrest and political instability. Consumer and investor uncertainty lingers until late 2022, causing a prolonged downturn in financial markets, travel and restaurant bookings, and retail sales.

Impact: The global recovery slows sharply in 2022, both in emerging and developed markets. This prompts major central banks to slow (but not to reverse) monetary tightening. Inflation remains elevated throughout the year. The World Bank extends its debt deferral programme to emerging countries until end‑2022.

In this scenario, countries with low vaccination rates suffer disproportionately. Vaccine makers update vaccines, but the pre-existing ones remain in use (Omicron-focused shots will be used by rich countries and/or for vulnerable people, and non-Omicron-specific shots in poorer countries and/or for less vulnerable people), exacerbating vaccine inequity.

agathe Demarais, Global forecasting director

Scenario 3 (probability 15%): Omicron is more infectious and more severe than Delta. Current vaccines prove ineffective against Omicron.

Synopsis: Omicron is more lethal than Delta and escapes immunity. This prompts a near-repeat of the situation of early 2020, with governments reacting too late and adopting measures in an unco-ordinated fashion. Developed countries impose stringent lockdowns, but healthcare systems are overwhelmed in many places. Vaccine mandates become the norm, but the severity of Omicron means that they are more widely accepted and social unrest is more contained than in our second scenario. Supply-chain problems spike, severely dampening the global recovery. Consumer and investor sentiment sinks, leading to a downturn in financial markets, travel and restaurant bookings, and retail sales. Commodities prices plunge. Travel bans are widespread globally and remain in place until 2023, dampening tourism. Vaccine makers adapt their shots, and these are rolled out from May 2022 in developed countries. The global vaccination drive goes back to square one, with richer countries hoarding supplies and poorer ones turning to China for donations. 

Impact: The global economy goes back into recession in 2022. Global inflation decreases as demand is subdued. Major central banks embark on another course of monetary easing. Generous fiscal stimulus is put back into place in developed countries, fuelling debt levels. The World Bank extends its debt deferral programme to emerging countries until end‑2023.

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