We know the human cost of Omicron, but what does this next wave of Covid mean for the world economy?

How will the world get through this one? Just at the moment when everyone – governments, companies, people – seemed to glimpse a calmer economic outlook, suddenly the uncertainties and horrors have come back to beat us up. We do not yet know the medical implications of the wave of infections from the Omicron variant, but we are already very aware of the impact on our daily lives as countries clamp down on visitors, opening hours and rules of behaviour.

And there is more to come. Joe Biden will make a speech on Tuesday, issuing a “stark warning” to Americans. Britons have been warned that further restrictions are quite possible. Across Europe the clampdown has tightened, and will tighten further. In human terms it is miserable, whatever view one takes of the necessity of the measures, but what might all this mean in economic terms? Some points.

The first thing is that in aggregate terms the world economy is basically back to where it was before the pandemic struck in March 2020. Overall it probably is a bit ahead, for the two largest economies, the US and China, are both above their previous peaks. Europe, taken as a whole, may be a bit below the level of February 2020, as Germany does not look to be there until the first quarter of next year, and both Italy and Spain have been falling short. The UK may be there already, and the all-important services sector was at the end of September, though the past weeks have been disappointing, to put it mildly.

But while the economy as a whole may have recovered all right, it is not at all where it should have been had there been no pandemic. There is still a lot of ground to be made up. And as we all know, while some sectors have boomed, others have been savaged. Nothing can take away from the misery of restaurants that have seen their Christmas bookings collapse, however ingenious the hospitality businesses have been in creating new opportunities as clampdowns happen. It is no good saying cheerfully that global equity markets are close to their all-time peaks and many people love working from home if you are trying to run a skiing business in the Alps and see another lost season ahead.

The experience of the impact of previous lockdowns does give us a clue to the way the world will respond, at an economic level, to the threat. In overall terms this coming three months will see a halt to the recovery. That will lead to technical recessions in several major economies – recessions being defined by there being two consecutive quarters of negative growth. Germany is on the brink of recession already, thanks in part to supply shortages. However, I would expect a bad first quarter to be more than offset by a better rest of the year.

But more interesting than the overall progress is the change in the shape of the economy, and the implications that will have for the year ahead. Three stand out.

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First, the supply chain problems will lead to greater local production. There are thousands of examples of that all over the world. Second, labour markets are very tight, with a once-in-a-generation shift in power between workers and employers. And third, inflation is soaring in a way that it has not done, also for a generation.

The first two of these elements are, on balance, good news. The new economy will be different from the old economy, supporting local jobs and rewarding working people. The third, soaring inflation, is not. We don’t know how long it will take for the central banks to crush inflation out of the system, or the levels of interest rates that will be needed to do so.

That leads to a final thought. The world economy has proven itself to be extremely resilient. The recovery will pause, but it will not be derailed for long. The bigger the hit it takes in the next few months, the bigger the rebound later on. But once the pandemic finally ebbs, there will be the legacy of higher inflation than the majority of working people in the west have ever experienced. Meanwhile, though, we have to get that rebound.