Austria lockdown casts shadow over rest of euro-zone

The “full lockdown” in Austria announced earlier today is a response to the rapid deterioration in the Covid situation there and we estimate that it could knock around 1.5% off the country’s GDP in Q4. While on its own this would not make a big difference to euro-zone GDP, there is a clear risk that other larger economies, notably Germany, are forced to follow suit. Our euro-zone Q4 GDP growth forecast may well prove too optimistic and stagnation, or even contraction, are plausible.