Skip to content

What Omicron Variant Could Mean for Euro-Area Growth

Omicron’s Downside Risks to Activity

It’s clearly too early to predict how the omicron variant of Covid-19 will shape the outlook for the euro area, but Bloomberg Economics has sketched out some worst- and best- case scenarios. Under the worst case, the new variant totally escapes vaccines, taking the economy back to early 2021 until an updated shot becomes available -- that would cause the euro-area economy to shrink by about 2% in the first quarter. For the European Central Bank, there’s no direct takeaway ahead of the December meeting. Still, if the strain is seen to have a substantial negative impact on the economy, the Pandemic Emergency Purchase Program could be extended, although the Governing Council needn’t rush a decision.

Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.