Goldman Sachs Group economists believe that the spread of the omicron mutant strain will form a “moderate drag” on the growth of the U.S. economy, and therefore lowered its expectations for the U.S. economy for this year and next.
Goldman Sachs economist Joseph Briggs pointed out in a report to clients over the weekend that the U.S. GDP is now expected to grow by 3.8% this year, compared with the previous forecast of 4.2%. The forecast for 2022 has been revised down from 3.3% to 2.9%.
“Although many questions are still unanswered, we now think that the most likely scenario is that the virus will spread faster, but the immunity against severe illness will only be slightly weakened, thus constituting a mild downward scenario,” Briggs said.
He pointed out that omicron may only have a moderate impact on service industry spending and may exacerbate supply shortages. At the same time, it may also delay the time when some people are willing to return to work.
Briggs believes that omicron has mixed effects on inflation. For example, industries that are sensitive to the epidemic, such as tourism, may be impacted, while further supply and labor shortages may push up prices more persistently.
The International Monetary Fund (IMF) also warned that the mutant strain may hinder its expected global economic recovery next year.
“Most of the overall risks are downside risks,” Gita Gopinath, chief economist of the IMF, said in a video-linked speech at the International Finance Forum in Guangzhou on Saturday.
