Omicron poses near-term risks to Asia as it comes amidst stretched supply chains, inflation

JUST as many countries are reopening their borders, the emergence of Omicron is threatening to derail global recovery from a two-year pandemic, but economists are sanguine that the downside risk to Asia's growth may be limited due to high vaccination rates.

In its latest report "Assessing the risks from the new Covid variant", Morgan Stanley economists, led by chief Asia economist Chetan Ahya, say this is provided the new Covid-19 variant is not more challenging than Delta variant, which became the world's dominant strain after emerging in India late last year.

"Relative to the outbreak of the Delta variant in Asia in mid-2021, we now have much higher levels of vaccination. Out of 12 economies, 10 already have at least 70 per cent of their population inoculated with one dose of vaccine," Morgan Stanley says.