UBS analysts ran a series of calculations to predict the “cost” of a possible lockdown in nine European countries, including Greece, after the measure was introduced in Austria.
Such a scenario could lead to stagnation or even contraction of the eurozone economy this quarter. There will be implications for the European Central Bank, according to UBS, as the chances of an extension of the program (έκτακτης πανδημίας κινητών αξιών PEPP) increase after March 2022.
Austria has already introduced quarantine until December 13, while restrictive measures have been introduced in Germany, the Netherlands and Ireland. Nine countries are under intense pressure from the pandemic. Rates show an increase in cases in Greece, Austria, Germany, Belgium, Finland, Ireland, the Netherlands, Slovakia and Slovenia.
Nine countries account for 50% of the eurozone’s GDP and the number of cases exceeds or is close to their previous record. In addition to Austria, where restrictions are in place, shops in the Netherlands are expected to close earlier and Ireland has cut opening hours for restaurants and bars.
As the number of cases increases, it is more likely that even stricter measures will be taken in Germany, according to UBS, which does not see possible global isolation, however. Analysts explain that restrictive measures no longer do as much damage to GDP as the first blockages. This is due to the fact that the economy has largely “learned to survive” in the new reality.
However, the measures in place so far (in Austria, the Netherlands, Ireland, Slovakia, Slovenia and Latvia) are estimated to deduct about 0.15 percentage points from eurozone growth in the fourth quarter of 2021 (current UBS estimate indicates quarterly growth of 0.8%). The restrictive measures imposed on Germany would result in an additional 0.15 percentage point deduction, bringing the total cost to 0.30.
If all nine countries, including Greece, enter lockdown mode, then UBS estimates that eurozone growth losses in the fourth quarter will be in the range of 0.7-0.8 percentage points, which means that during this period the eurozone will remain unchanged. level. In any case, if the countries of southern Europe are forced to tighten measures, the fourth quarter may show negative growth.
“If the restrictions are not quickly lifted with the onset of the new year, there will be additional financial risks in the first quarter of 2022,” analysts say, who note that if there are restrictions on economic activity, they will be offset by additional measures to support households and businesses.