How Will Omicron Impact the Economy in 2022?

Despite dire predictions from the World Bank and others, there are reasons for optimism in the year ahead. Will the Omicron Surge Dent Economic Growth? The rapid spread of the Omicron variant has many worried about the impact on economic growth. The World Bank released a forecast last week stating that additional supply-chain disruptions, labor shortages, and the reduction in fiscal support would slow global growth to 4.1% in 2022 from 5.5% last year. For the U.S., GDP growth is forecast to slow to 3.7% in 2022 from 5.6% in 2021. China could see the biggest dent, with GDP growth falling to 5.1% in 2022 from 8% in 2022.1 These growth forecasts are all lower than they were just three months ago. --------------------------------------------------------------- [What Do These Economic Forecasts Mean For Your Investments?]( We’re in year three of the pandemic – what should you do with your investments now? As the Omicron surges again, it’s normal to feel worried and questionable about your portfolio. Yes, the surge could put a dent in economic growth, but your investments can stay protected! Let us help you focus on factors that can impact your financial future regardless of the state of the market, instead of basing your decisions on “what-if’s.” Instead of worrying, we are offering all readers a look into our just just-released February 2022 Stock Market Outlook report to guide you. This report will provide you with our forecasts along with additional factors to consider: - Zacks Rank S&P 500 Sector Picks - Zacks view on equity markets - What produces optimism in 2022?? - Zacks forecasts for 2022 - Zacks ranks industry tables - Sell-side and buy-side consensus - And much more If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today! [IT’S FREE. Download the Just-Released February 2022 Stock Market Outlook2]( --------------------------------------------------------------- I will get into some of the reasons for these falling economic forecasts below. But let me give readers the bottom line first: the World Bank, International Monetary Fund, and other forecasting institutions – such as the Congressional Budget Office and even the Federal Reserve – are almost always wrong. When forecasts grow more bleak or pessimistic, that is usually a reason to be hopeful, in my view. If growth outperforms expectations, that is generally good news for stocks. The spread of the Omicron variant is certainly not helping the economic expansion, but here is the real question: Is Omicron hurting the expansion as much as forecasters think it is? According to the World Bank, the latest disruptions have sunk international trade by 8.4% and industrial production by 6.9%, compared to where those figures should have been without the impacts of Covid-19. Yet as of mid-2021, global trade was already 5% higher than it was in December 2019, before the pandemic arrived. In my view, this recovery in trade is better than just about anyone expected it to be, which again may help explain the stock market’s resiliency throughout this period. China is also a growing concern in the current environment. China is still pursuing a zero Covid-19 strategy, and flare-ups recently have led to harsh restrictions and mass testing on a scale not seen since the beginning of the pandemic. Some major manufacturers have shuttered factories, and workers have been in short supply due to restrictions in various provinces. Major multinational corporations like Nike, Volkswagen, and Samsung have already reported production snags that could impact inventories and sales. The worry is that China’s reduced production capacity could result in further damage to an already compromised global supply chain, especially given how much the world relies on Chinese exports. To put this in perspective, China’s trade surplus is expected to have hit a record high in 2021. It’s not all bad news, however. The World Bank is also projecting that some economies are likely to strengthen in 2022, particularly those that were impacted most during the earlier phases of the pandemic. Among those expected to see stronger growth from 2021 are countries like Indonesia, Thailand, Malaysia, and Vietnam, all of which are emerging factory and manufacturing powerhouses that have learned how to navigate the pandemic without instituting full economic shutdowns. The World Bank also offered a silver lining to the potential economic issues brought on by Omicron, in stating that supply bottlenecks and labor shortages should ease throughout the new year and that inflation and commodity prices should also come down in the second half. Bottom Line for Investors For the most part, people are drawn to negative news stories or those with a pessimistic bent. So when an organization like the World Bank issues forecasts that stress risk and call for falling economic growth rates, it usually grabs our attention. No matter that the World Bank and other forecasters are almost always wrong. Case-in-point: a year ago, the World Bank forecast global economic growth of 4% in 2021, but the actual growth rate is estimated to be closer to 5.5%. That may not seem like a big miss, but it actually means the World Bank missed by over 25%. That’s significant. In 2022, the World Bank is calling for an “increased risk of a hard landing” for the global economy. Similarly, the World Economic Forum’s annual risk report said that 84% of business leaders and experts were concerned about the growth outlook for 2022, while only 4% were optimistic. For investors, I think it’s important to take these negative outlooks as positive news: if growth outperforms even by just a little, that is usually all the support stocks need. We cannot predict the future state of the market, however, we can be ready for it! Investors who are looking for long-term financial growth have to focus on factors that weather through the market highs and lows. We are offering all readers our [just-released February Stock Market Outlook report](. You’ll discover Zacks’ view on: - Zacks Rank S&P 500 Sector Picks - Zacks view on equity markets - What produces optimism in 2022? - Zacks forecasts for 2022 - Zacks ranks industry tables - Sell-side and buy-side consensus - And much more If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today! [FREE Download – Zacks' February 2022 Stock Market Outlook Report3]( About Zacks Investment Management Zacks Investment Management was born out of one of the country’s largest providers of independent research, Zacks Investment Research. 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