The Zhitong Finance App learned that ECB economists said on Wednesday that the Eurozone economy's performance against this year's energy shock was better than expected, and reduced dependence on fossil fuels, increased financial support, and the boom in artificial intelligence (AI) investment have all supported economic growth.
The assessment was published in an ECB blog post, adding further arguments to the growing discussion among policymakers — the discussion focused on whether structural changes in the global economy were driving up growth, investment, and interest rates after a period of relative weakness.
Affected by the energy market disrupted by the war in Iran, oil and gas prices soared, the Eurozone was impacted, concerns about inflation rekindled, and triggered a sell-off in global bonds. However, until now, the Eurozone economy has continued to grow, and various business surveys have shown that the expansion trend is still intact.
ECB economists Oscar Arce, Gerrit Koster, and Beatrice Pierluigi estimate that the Eurozone economy is currently only about half that of the early 90s of the last century, which weakens the transmission of energy price shocks.
Furthermore, the increase in renewable energy and nuclear power generation has weakened the correlation between gas prices and electricity costs in many countries.
According to the blog post, AI-related trade has become an “important tailwind” for the Eurozone, and technology-related export orders and AI-related industries are outperforming other sectors.
The fiscal stimulus is equivalent to 0.5% of GDP, double the level expected at the end of last year, mainly due to the German government's spending on defense and infrastructure.
However, economists warn that much of this support may prove to be phased. Global demand, fiscal stimulus, and AI investment are all likely to cool down, and once geopolitical tensions increase or energy markets experience new disruptions, the Eurozone economy will once again be exposed to risk.
The above conclusion comes as the ECB is discussing further interest rate hikes to curb the sharp rise in energy-driven inflation. It is expected to raise interest rates for the third time this year in December.