Goldman Sachs cuts US GDP growth forecast for 2022 on fear of omicron

Goldman Sachs cut its 2022 US economic growth outlook to 3.8% on Saturday, citing risks and uncertainties surrounding the emergence of the omicron variant of the coronavirus.

Goldman economist Joseph Briggs said in a note that the omicron could slow economic reopening, although the company expects “only a modest reduction” in spending on services.

The company now expects 3.8% growth in US GDP (Gross Domestic Product) in 2022, up from 4.2% previously, on an annual basis, Briggs said.

“Although many questions remain unanswered, we now believe that a moderately downside scenario is more likely where the virus spreads more rapidly, but immunity to serious disease only weakens slightly,” he said.

Lack of labor can last longer if people are not comfortable returning to work because of the variant, the note added.

Goldman noted that the spread of the virus could worsen supply shortages if other countries implement tighter restrictions, although raising vaccination rates among foreign trading partners prevents serious disruptions.

Goldman Sachs’ forecast for the United States comes after the managing director of the International Monetary Fund (IMF), Kristalina Georgieva, said on Friday that her estimates of global economic growth are likely to be lowered due to the omicron.