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Omicron variant could slow global growth, says IMF chief Georgieva

The new Omicron variant of OVID-19 could slow the global economic recovery, just as the Delta strain did, IMF chief Kristalina Georgieva said on Friday.

“A new variant that may spread very rapidly can dent confidence and in that sense, we are likely to see some downgrades of our October projections for global growth,” she said at a Reuters event.

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In its most recent World Economic Outlook, the fund projected global growth of 5.9 percent this year and 4.9 percent in 2022, but the United States and other major economies suffered sharp downward revisions after the spread of the Delta variant “caused some friction,” Georgieva said.

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“Even before the arrival of this new variant, we were concerned that the recovery, while it continues, is losing somewhat momentum,” the IMF chief said, noting that policymakers are now dealing with new issues like inflation.

The IMF’s most-recent forecasts raised concerns that global supply chain issues and uneven distribution of vaccines were slowing the rebound, and causing some countries to be left behind.

A surge in demand in many advanced economies coupled with shortages of key components like semiconductors has fueled a wave of prices increases.

Less than two months ago, Georgieva expressed confidence that inflation would not become a “runaway train” but on Friday she said the US Federal Reserve will have to increase interest rates in 2022, rather than in 2023, as the IMF previously predicted.

The Fed, which cut the benchmark lending rate to zero in the early days of the pandemic, already has started to pull back on its stimulus measures and has signaled it will speed up that process, which would put it in position to lift rates off zero by mid-year.

“We do believe that the path to policy rate increases may be walked faster,” Georgieva said.

Georgieva said high inflation in the United States should be addressed by policymakers but that such hefty price pressures are not being observed equally around the world, allowing other economies to change policy at their own pace.
The IMF’s head added that the strength of the US economy has a positive spillover effect around the world even if it means the US Federal Reserve will wind down its accommodative policy stance in the months ahead, as most economists now expect.
Georgieva said tariff reductions are a “useful tool” to help control inflation and that she was encouraged by US Trade Representative Katherine Tai’s work on tariff reductions through an exclusion process.
“It is not a silver bullet. There has to be action on all these fronts, so we can see the issue of inflation being contained.”
Georgieva called for more aggressive debt restructuring for the current debt burden in developing countries not to become a long-term headwind.
“The reality is that 2022 is going to be a very pressing year in terms of dealing with debt,” she said, adding that sovereign debt has risen 18 percent during the COVID pandemic and it will take decades to go to pre-pandemic levels unless there is a “much more thoughtful and aggressive” policy.
“So far, interest rates are relatively low, this is not so dramatic. Going forward … that may not be the case.”

Read more: WHO says measures against delta work for omicron variant too

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UAE reports 1,796 new COVID-19 cases, no deaths

The UAE announced 1,796 new COVID-19 cases on Saturday, the official Emirates News Agency reported.

This brings the current total active cases in the UAE to 17,551 and the total number of COVID-19 cases since the start of the pandemic to 949,384, according to data from the National Emergency Crisis and Disaster Management Authority (NCEMA).

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The cases were determined out of 232,943 tests in the last 24 hours.

No deaths from the virus were recorded on Saturday, maintaining the total deaths caused by COVID-19 to 2,317 in the UAE.

At least 1,727 patients recovered in the previous 24 hours, bringing the total COVID-19 recoveries to 929,516.

On June 13, the National Emergency Crisis and Disaster Management Authority (NCEMA) announced it would strictly enforce its mask rules – with penalties for those flouting the protocol – and announced it would tighten its rules on the Al Hosn green pass system amid rising coronavirus cases across the country.

NCEMA said that it has recently “monitored some behaviors that have become a danger to society and public health,” referring to people not adhering to COVID-19 precautionary and preventative measures and how it has “negatively” impacted recovery efforts.

“Negligence and recklessness in following precautionary measures, and failure in the societal role in maintaining public health and acquired immunity, has resulted in a rise in the number of infections and new waves of the virus,” the authority spokesman said in the briefing.

The authority reaffirmed the need to wear masks in closed public spaces, reiterating that it was mandatory and that not adhering to this rule would result in a fine of up to $816 (AED 3,000).

According to the World Health Organization, more than 4.1 million cases were reported globally in the last week.

It added, however, that the worldwide number of deaths remained relatively similar to the week before, at about 8,500, noting that COVID-related deaths increased in three regions: the Middle East, Southeast Asia and the Americas.

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Omicron-specific COVID-19 vaccines could increase protection as boosters: EMA

Coronavirus vaccines tweaked to include the omicron variant strain can improve protection when used as a booster, the European Medicines Agency and other global health regulators said on Friday.
Following a meeting on Thursday, the EMA said global regulators had agreed on key principles for updating COVID-19 shots to respond to emerging variants.
While the existing coronavirus vaccines continue to provide good protection against hospitalization and death, the group said, vaccine effectiveness has taken a hit as the virus has evolved.
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As such, an omicron-specific or bivalent booster – meaning a vaccine that includes both the new strain and the original coronavirus strain – could “increase and extend” protection, a statement from the EMA said.
The statement refers specifically to the mRNA vaccines. Both Pfizer Inc and Moderna Inc have been testing retooled versions of their vaccines to include the omicron variant.
Vaccines which include other variants, for example the beta variant, might also be considered for use as boosters if clinical trial data demonstrate an adequate level of neutralization against omicron and other variants of concern, the statement said.
It follows guidance from the World Health Organization that omicron-specific boosters could restore protection against emerging strains of the coronavirus.
But it stops short of the position of the regulator in the United States, the Food and Drug Administration (FDA), which said on Thursday that it would seek the inclusion specifically of the newer BA.4 and BA.5 strains of omicron, currently driving a surge in new infections globally, in any new shots for use domestically.
On Tuesday, the head of a WHO advisory committee that has considered the modified shots said the group preferred BA.1-based boosters, arguing that the variant is more distinct and could generate a broader response than the more recently circulating subvariants.
Top US FDA official Peter Marks said in an interview that regulators from other countries were seriously considering using new boosters based on the BA.1 omicron variant that caused the massive surge in cases last winter, because those shots can be available sooner than the BA.4/5 based booster the United States plans to use.
The EMA said it would provide more details in coming days.
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Russia scraps remaining COVID-19 restrictions

Russia said on Friday it was ending all restrictions to combat the spread of COVID-19, including the requirement to wear masks, citing a steady decline in deaths from the virus.
However, it did not rule out re-introducing restrictive measures if the situation deteriorates.
Consumer watchdog Rospotrebnadzor said it was “suspending previously introduced restrictions, including the mask regime, a ban on public catering at night, and a number of other measures.”
For more coronavirus news, visit our dedicated page.
It said the dynamics of the virus were consistent with global trends and 93 percent of confirmed cases were mild or asymptomatic.
Since the start of the pandemic in Russia in April 2020, over 800,000 people have died from coronavirus or causes related to COVID-19, Reuters calculations show, with the country recording over 18 million infections.
Russia was quick to develop and launch its Sputnik V vaccine when the pandemic struck but take-up was slow, with many Russians citing distrust of the authorities and fear of new medical products. About 52 percent of the population has been fully vaccinated.
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