Delta variant causing a recovery variant
Just as people were hoping to soon see the end the COVID-19 pandemic, Delta variant cases began increasing in China and many other parts of the world. Originating in India, the Delta variant is the most contagious variant. This is bad news. The good news is that, at least for those who have been vaccinated, the Delta variant doesn't appear to be as deadly.
Few vaccinated people, even if they are infected by the Delta variant, end up in a hospital, and fewer actually die.
In fact, the United Kingdom's policy of withdrawing restrictive measures and instead relying on herd immunity, so far, hasn't resulted in a disastrous increase in the fatality rate. So there is a possibility that lives and the economy both could be saved at the same time.
But let's admit it. The Delta variant will have a serious impact on China's economic recovery or, for that matter, on the economic recovery of any country. China has until now done an exceptionally good job of curtailing the spread of the novel coronavirus. It has been pretty much insulated from the rest of the pandemic-riddled world thanks to the strict screening measures at airports and other border entry points. But one small misstep by a man, which happened at the Nanjing Lukou International Airport due to its poor management, is threatening to wipe out all the good work that the country has done.
It's a pity that we are seeing these abhorrent mini-outbreaks again in scores of cities across the country. Indeed, we have to again follow strict pandemic-appropriate norms such as wearing face masks, maintaining social distancing, and enduring localized lockdowns, which will affect the country's economic recovery. And small and medium-sized businesses are likely to bear the brunt of the policy change in affected areas.
The GDP growth in the second quarter of this year was nearly 8 percent. And the previous consensus forecast for the third quarter was at least 6 percent. Which doesn't look like it is going to happen. We would be lucky if the impact of the mini-outbreaks is restricted to just knocking 1 percent off the original forecast. The International Monetary Fund has already revised down its 2021 growth forecast for China and many other economies.
Outside of China, the picture looks even bleaker. In the United States, daily infection numbers have shot up again to six digits, dashing almost all hopes of a steamy US and global economic recovery, which some analysts had compared to the "Roaring Twenties", referring to the decade-long stretch of strong economic recovery in the 1920s after the 1918 flu pandemic.
With US states such as Florida almost back to normal two months ago, the Joe Biden administration was pretty much on target with its vaccination program. "Corporate America" was unable to hire fast enough. Wages, even for the non-skilled workers in hotels and restaurants, were rising fast. Flights and airports were packed. Dow Jones was at an all-time high. Everything looked good. But then suddenly things changed with the Delta variant running amok.
Most European countries have given up the fight against the virus. The UK government has put up its hands. The French government is under immense pressure to do the same. I am afraid the fight against the Delta variant could be confined to praying for a miracle to happen. Countries, including China, may have to weigh the most balanced approach to fighting the Delta variant while stabilizing growth.
Yet this is not the first time an economist has chosen to pick a fight with a medical specialist on a medical issue. Previous US president Donald Trump's trade advisor Peter Navarro, who was a professor of economics at the University of California, Irvine, before joining the Trump administration, picked a fight with Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases and chief medical advisor to the US president, on COVID-19 policy issues back in 2020, and was pretty ridiculed on national TV.
But how to strike the right balance between sustainable pandemic control and stable economic growth and continuous job creation is a question facing all countries.
The author is a professor at the University of International Business and Economics and a research fellow at the Academy of China Open Economy Studies at UIBE. The views don't necessarily reflect those of China Daily.