Recent reports of a new coronavirus strain named "Omicron" have coursed through global markets, amid a continuous increase in Covid-19 cases in Europe. First discovered in South Africa, cases have since been recorded in Belgium, Botswana, Israel, and Hong Kong, Nigeria, among others. In a recent report, the Nigeria Centre for Disease Control (NCDC) identified the presence of the new variant in three travelers from South Africa. These new developments are reminiscent of the Delta variant, which was first identified in India in Dec-2020.
On 26 November 2021, WHO designated the variant a “variant of concern”. Omicron appears to have a higher risk of re-infection than other virus classes as well as easily transmissible, according to preliminary findings. As a pre-emptive measure, countries all over the world have begun to impose travel bans and restrictions on countries deemed “high risk”. Southern African countries have so far been the most affected. Also, concerns about travel demand and potential lockdowns drove Brent crude oil to $70.57/b on Tuesday, 18.8% lower than this year’s $86.88/b peak.
Looking ahead, we anticipate that this will have some impact on economic activity, potentially dampening the global economic recovery. However, for the time being, we are less concerned with the broader macro picture. Vaccine campaigns have been demonstrated to be highly effective, even against the Delta variant, and there is no evidence that the Omicron variant will significantly impact vaccine effectiveness. However, with Nigeria recording its first cases of the variant, we might see countries placing the country on travel ban lists. This has every tendency of denting Nigeria’s international trade, which can impact economic growth and dollar reserves accretion. Furthermore, we expect oil prices to experience further pressure on the back of heightening worries about oil demand.