Omicron variant hits business sentiment

Sixty-one percent of businesses have become more negative about global economic growth prospects over the past month, according to a survey by Oxford Economics of the world’s largest companies and other businesses.

Concerns over the risks posed by supply-chain disruption and the new Omicron virus variant are evident throughout the latest survey.

Businesses now anticipate a more moderate rebound in global economic activity in 2022. The mean expectation for world growth next year declined to 3.6% in the latest survey, from 3.9% in October.

Businesses attach a relatively high weight to downside scenarios, seeing around a 1-in-5 chance of weaker global growth on the back of supply-chain disruption throughout 2022 and a similar probability of a “long Covid” scenario in which new virus variants result in a protracted period of public health restrictions.

Half of the respondents report that their business is currently being affected by the supply-chain crisis, such as material and component shortages and transportation bottlenecks. Around 30% of those affected report being severely affected.

Few expect an early end to disruption, and almost 1-in-5 businesses (19%) now expect disruption to their business to persist beyond 2022.