The eurozone has weathered this year's energy impact better than expected. According to economists from the European Central Bank, its economic dependence on oil is now half that of the early nineties.
According to es.marketscreener.com, economists from the European Central Bank believe that the eurozone economy has coped with this year's energy impact better than anticipated. This assessment was published on the institution's blog and attributes the outcome to three factors: reduced dependence on fossil fuels, increased fiscal support, and the rise of investment in artificial intelligence.
The context is a sharp rise in oil and gas prices following the Iran war, which has rekindled fears of inflation. Nevertheless, the eurozone continues to grow, and business confidence indicators suggest that expansion is ongoing.
The authors of the analysis, Oscar Arce, Gerrit Koester, and Beatrice Pierluigi, estimate that economic dependence on oil has been cut by half compared to the early 1990s. On the other hand, increased generation from renewables and nuclear has weakened the direct relationship between gas prices and electricity costs in several countries.
The eurozone's fiscal stimulus stands at 0.5% of GDP, double what was anticipated at the end of last year. This is primarily driven by public spending from the German government on defence and infrastructure.
Economists also warn that much of this support could be temporary. Global demand, fiscal stimuli, and investments in artificial intelligence could lose momentum, especially if geopolitical tensions worsen or if energy markets experience further shocks.
The conclusions come as the European Central Bank considers further interest rate hikes to curb the inflation surge stemming from energy costs. A third increase of the year is expected in December.
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