Pandemic Aftershocks / Agency Brief: July 2021, part 2 — A growth slowdown?

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Are we facing a growth slowdown?

The second quarter of the year saw growing hopes for an end to the coronavirus pandemic in countries across the world. Pandemic financial support packages began to be withdrawn, health protection measures were scaled back, large one-hit stimulus packages were deployed hoping to reignite stalled economies, and hopes of a recovery bloomed.

This gave a breakneck economic surge, of course, that would inevitably have calmed to a more sustainable pace. This surge, amongst the remains of the pandemic, created the supply bottlenecks that the global economy has experienced.

The alarming spread of the delta variant, however — a much more contagious variant, spreading two to three times more quickly than the original —  is the greatest threat to the recovery. Global markets are already showing their fears over the spread of delta.

Thankfully, although less effective, vaccines appear to limit the worst effects of the virus, with the ratio of infections to both hospital admissions and deaths markedly different now in countries with advanced vaccination programmes from earlier waves. However, having a contagious variant still rife in a partially-vaccinated population, as Britain chose to do on 19 July, creates the best conditions for a virus adapting towards 'escaping' vaccines. With the rate delta is transmitted, it is feared countries may struggle to get to the precious 'herd immunity' state through vaccinations, even with successful campaigns. This is much worse still for poorer countries with less advanced vaccination programmes.

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