The summer pandemic slows down the global economy as Delta-variant dogs are trying to rehabilitate factories, offices and schools.
Instead of the final months of 2021, it’s clear that boosters can be needed to fade away with vaccine, reopening of the workplace and the border closures remain, and the acute phase of the pandemic is over.
Data over the past week captured a worldwide weakening as infections hit travel and spending and worsen supply bottlenecks that are dampening manufacturing and trade. Surging gas prices are also emerging as a threat.
In the U.S., hiring sharply slowed to its smallest increase in seven months in August and airport check ins, hotel bookings and dining reservations all show softer demand. Germany’s key business sentiment gauge deteriorated and China’s services sector crumbled in August. A global measure of manufacturing slumped.
Activity gauges have missed expectations in major economies, according to Goldman Sachs Group Inc., while Citigroup Inc. warned the recovery could moderate with a deepening divergence between sectors and regions.
“The spread of the delta variant is slowing the reopening process and has caused us to mark down growth globally,” said Robin Brooks, chief economist of the Institute of International Finance in Washington, referring to its revised 5.7% forecast for this year, from 6.2%.
That stumble could complicate central bank’s plans to pull away from their crisis support by slowing asset purchases or raising interest rates. Federal Reserve Chair Jerome Powell on Aug. 28 warned of ongoing slack in the labor market as the pandemic continues.
