Another difficult winter ahead amid Omicron threat for the eurozone

We have revised down our near-term eurozone growth forecast, owing to deteriorating health conditions and the emergence of the Omicron variant. This adds to existing headwinds relating to surging inflation, persistent equipment and labour shortages, and a gradual withdrawal of policy support.

What you will learn:

• The downward revisions vary across economies. Overall, we believe the hit to eurozone growth will be milder than during the 2020 winter wave and largely compensated for by stronger growth from Q2 2022.
• We see Germany, Austria, and Greece experiencing drops in GDP in Q4 2021, with Spain at the other end of the spectrum.
• The outlook remains highly uncertain, not least because of the still limited knowledge about the Omicron variant, the scope and duration of winter restrictions, or behavioural shifts among consumers.