ECB: AI and Green Transition Help Eurozone Withstand Energy Shocks
nashnova research
ECB economists say the euro zone's oil dependence has fallen to roughly half its early-1990s level; combined with an AI trade tailwind and a fiscal impulse twice as large as expected, the economy kept expanding after the Iran war drove up energy prices — but the supports may be temporary.
Oil prices surged — why is the euro zone still standing?
The Iran war disrupted energy markets, sending oil and gas prices sharply higher, reigniting inflation fears and triggering a global bond sell-off.
Yet the euro-zone economy kept expanding; business surveys show growth momentum was not fundamentally shaken.
This means → compared with the 2022 energy crisis, the euro zone's sensitivity to energy shocks has visibly weakened.
How much has energy dependence fallen — and what drove it?
ECB economists Oscar Arce, Gerrit Koester and Beatrice Pierluigi estimate that the euro zone's oil dependence is now roughly half what it was in the early 1990s.
In plain terms = the same percentage rise in oil prices now hits the economy with about half the force it did 30 years ago.
Rising renewable and nuclear power generation has weakened the link between gas prices and electricity costs across several member states — gas prices up no longer means electricity bills follow in lockstep.
What role did AI and fiscal stimulus play?
AI-related trade has become a "significant tailwind" for the euro zone, with tech-linked export orders and AI-adjacent sectors clearly outperforming the broader economy.
On the fiscal side, euro-zone stimulus reached 0.5% of GDP — twice the level expected at the end of last year.
This means → the extra boost came mainly from Germany ramping up defence and infrastructure spending, effectively giving the economy an additional shot in the arm.
Can these tailwinds last?
The three economists warn that a significant portion of the support may be temporary.
Global demand, fiscal stimulus and AI investment all carry the risk of fading; if geopolitical tensions worsen or energy markets are hit again, the euro zone faces greater exposure.
This reflects a reality: the euro zone has not truly become "immune" to energy shocks — it has temporarily drawn a strong hand.
What does this mean for the ECB's rate decision?
The ECB is debating whether to raise rates further; a third hike this year is expected in December, aimed at curbing energy-driven inflation.
In plain terms = if these supports hold, the central bank has more room to tighten; if they fade, another hike risks tipping the economy toward recession.
Whether the tailwinds persist will directly shape the ECB's policy room to manoeuvre.
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