Vaccine-Resistant Variants Could Result in a Stop-Go World Economy

(Bloomberg) -- Despite the rise of the delta variant, Bloomberg Economics’ base case remains that the world economy will see a continued recovery in the second half of 2021, underpinned by strength in the U.S., acceleration in Europe and India moving out of its slump. Further out, the increase in cases is a reminder that Covid-19 is likely here to stay, raising the prospect of permanently lower output relative to the pre-Covid path as contact intensive services suffer. In the worst case scenario, the appearance of vaccine resistant variants could result in a stop-go world economy, with sporadic lockdowns and reopening dragging major economies in and out of recession.

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