The new Covid variant, Omicron, could prove to be a major risk to the Indian economy in the near term, a Morgan Stanley research report said Monday. The report– Asia Economics: Assessing the risks from the new Covid variant—said that countries such as India would soon look at lockdowns if the impact of the new variant intensifies.
Countries including India tend to tighten restrictions when cases rise sharply. “So, if this variant proves to be as challenging as the Delta variant, or more, we see a high risk of selective lockdowns. That would have a bigger growth impact relative to group 2, though this may emerge later on,” the research report said. The report went on to add that the impact of the new Covid variant is also set to impact several other Asian economies in the coming months. Although due to the high number of people now vaccinated in India and throughout Asia, the impact could be less severe.
“The emergence of a new Covid variant poses a near-term risk to our constructive outlook on Asia. However, with a much higher share of the vaccinated population, the downside risk to growth could be less than what transpired in mid-2021, provided that the variant is not more challenging than Delta,” the Morgan Stanley report said.