Eurozone weekly economic briefing | Covid concerns dominate the outlook once again
The surge in Covid cases continues across Europe, prompting governments to announce new restrictive measures that will impact economic growth in the near term. While monthly activity indicators are still consistent with a robust expansion, we expect a substantial deterioration in December when surveys fully capture the impact from the latest wave.
What you will learn:
- The emergence of the new Omicron variant adds an additional layer of uncertainty.
- While it remains too soon to judge the health implications, let alone the economic effects, its rapid spread means that the path to normalcy will continue to be bumpy.
- Eurozone inflation hit an all-time high in November, surging to 4.9%. Although energy costs continue to dominate the rise in prices, the rise in core inflation was stronger than expected.
BoK’s monetary policy to tighten even as hiking cycle ends
Even without rate hikes, central banks' monetary policies can effectively tighten if the nominal neutral rate falls below the policy rate. We expect this will be the case for the Bank of Korea this year, as the gap between the policy rate and the nominal neutral rate widens.Find Out More
China: Emerging green shoots in Spring, but not out of the woods
We now incorporate a faster recovery from the post-Covid exit wave and raise our 2023 full-year GDP growth forecast to 4.5% (from 4.2% previously).Find Out More