Economists warned today that the new super-variant variant of Covid-19 known as ‘nu’ had the potential to knock the global economic recovery off course.
Stock markets were spooked by news that the UK has banned flights from six countries in southern Africa due to the outbreak of the ‘nu’ mutation.
Other countries in Europe have since followed suit, hitting airlines stock especially hard.
FTSE 100 shed 3.3% or 240 points near the close of trading, while US markets were down between 2.6% and 1.4%.
Capital Economics suggested that the key question is how governments will respond in the event that the ‘nu’ (B.1.1.529) strain spreads.
“That, in turn, will hinge on the extent to which it escapes the vaccines and, importantly, causes strains in national healthcare systems, ” said the economics research group.
Supply chains are already stretched, says Capital’s chief economist Neil Shearing, and a virus-related surge in goods spending, or port closures, would exacerbate existing supply strains and add upward pressure to goods inflation.
“Likewise, a new, more dangerous, virus wave could cause some workers to temporarily exit the workforce, and deter others from returning, making current labour shortages worse.”
Sectors and countries most exposed to the pandemic (tourism, energy etc.) have been hit hardest, added Shearing.
“We expect those patterns to persist in the near term as investors digest the implications of the new variant.”
Deutsche Bank added that the new B.1.1.529 variant has an unusually large number of mutations.
“In particular, it has a number on the spike protein, which is what most vaccines target, though we don’t yet know the extent to which it is either more transmissible or more deadly.”.
Scientists today said it was this spike protein that is causing so much anxiety as it is “so dramatically different” to previous variants.
“We have protein experts and virologists who are all extremely concerned,” one health official told the Telegraph.
B.1.1.529 has about 50 mutations, with 30 in the spike protein and 10 in the receptor-binder, which is how attaches to human cells, or greater than any other mutated strain – the delta variant has just two for example.
One scientist at the World Health Organization described the mutation as “the worst one we’ve seen so far”.
UK Health Secretary Sajid Javid described the emergence of the variant as of “huge international concern”, though he emphasised no cases had yet been confirmed in Britain though there were reports of infections in Hong Kong and Israel.
At Credit Suisse, they noted that early evidence suggested a key point was the very rapid displacement of the delta variant, which has been dominant in South Africa.
“When we look back to the emergence of the delta wave, the key indicator was how quickly delta increased its share of sequenced cases,” the Swiss bank said.
Credit Suisse pointed to data models that would indicate a rapid rise in B.1.1.529’s share of cases to circa 90% in areas where it is prevalent.
Although there is no data yet on whether existing vaccines work, Credit Suisse said laboratory testing is already underway according to the South African National Institute for communicable diseases.
“Initial thoughts from the institute that partial immune escape is likely a view that seems possible given the numerous mutations in comparison to the sequence that existing vaccines were designed against,” CS said.
“We expect the first view on this to be from in-vitro immunogenicity test, or perhaps from computer modelling of the sequence. We estimate initial lab data could take less than one week to generate given the sequence is already known and work is already ongoing.”