After limping back from the COVID 19 pandemic last year, the global economic recovery has been rattled by the rapid rise of the omicron variant.
The travel industry has been thrown into disarray once again, workers have been forced to isolate at home and governments are facing a choice between imposing restrictions or letting the economy be.
What is the impact of the highly contagious omicron variant on recovery? What are the mild symptoms that keep the economy from sinking again?
The head of the International Monetary Fund, Kristalina Georgieva, warned last month that global economic growth forecasts may have to be slashed due to the emergence of omicron.
The IMF has previously banked on growth of 5.9% for 2021 and 4.9% this year, but it could revise its estimates later this month.
The U.S. health authorities have cut the isolation period for asymptomatic cases by half to five days in order to soften the blow on the economy.
Mark Zandi, chief economist at Moody's, said he expects U.S. growth to be 2.2% in the first quarter, more than half less than a previous estimate of 5.2%.
Omicron is already doing economic damage, as is evidenced by weaker credit card spending, a decline in restaurant bookings, air flight cancellations, and many schools going back to online learning, according to Zandi.
He said that he does not expect omicron to pass through quickly and for growth to rebound in the second quarter, and growth for the year to be unaffected.
I think that each wave of the virus is doing less damage to the health care system and economy than the previous wave. According to Andrew Kenningham, chief Europe economist at Capital Economics, the economy will rebound in February due to tighter restrictions, consumer caution and absenteeism in the eurozone.
Countries with lower vaccination rates, which are mainly developing economies, face greater uncertainty, and a zero-COVID policy in China could put a brake on growth in the world's second biggest economy, as it locks down entire cities.
The travel industry was looking forward to a rebound in 2022 after it was devastated by border closures and lock downs.
Thousands of flight cancellations, cruises and hotel bookings were forced to dock due to the emergence of Omicron during the key winter holiday season.
In recent weeks, the shares of airline and cruise companies have risen, and investors have been optimistic.
The markets seemed to be looking at the post-omicron period, said Alexandre Baradez, analyst at IG France.
The economic recovery has had an adverse effect: Inflation has soared to decades-high levels in the United States and Europe as energy prices soared and demand for supply shortages increased.
Central banks insist that inflation is only temporary and prices will fall eventually, but it has hurt consumers and businesses.
Jack Kleinhenz, chief economist at the U.S. National Retail Federation, said that there was little known about the impact of omicrons on consumer demand, but people who stay at home are more likely to spend their money on retail goods rather than services like dining out or in-person entertainment.
He said that it would put more pressure on inflation since supply chains are already overloaded across the globe.
Supply chain bottlenecks caused shortages of materials last year, leading to increased prices of many products. There is a chance that higher demand for products on supply could cause price increases.
The Federal Reserve rattled markets this week after minutes from its December meeting showed that the central bank was ready to tighten monetary policy to tame inflation.
The British Chambers of Commerce said 58% of firms expect their prices to increase in the next three months.
The IMF estimates that governments have spent $226 trillion of debt in 2020 because of massive programs in 2020 to save their economies.
Niclas Poitiers, research fellow at Bruegel, said that Furlough plans to keep people employed made sense when there was so much uncertainty and entire industries shut down.
Poitiers said I don't see the need for massive funds to the economy.
The United States and Europe are investing in structural programs, such as President Joe Biden's $1.75 trillion Build Back Better social and climate spending plan.