The rapid spread of the Omicron variant adds downside risks to the region’s pace of economic recovery in the first half of 2022

At the dawn of 2022, Europe is grappling with another resurgence in COVID-19 infections due to the spread of the more contagious Omicron variant. Despite the recent rise in infection rates, business activity in November remained resilient. With total output being only 0.3 percentage points below Q4 2019 and its pre-pandemic levels, the region’s recovery is on track to continue. Yet, persisting supply-side constraints and now the rapid spread of the Omicron increase downside risks to the region’s output potential in early 2022 and beyond.