Which is why the European Commission is expecting economic output in the euro area to still increase slightly in 2023, in contrast to Germany. Economic activity in the euro area, too, is being hampered not only by tensions in the energy market but also by high inflation. The substantial upward pressure on prices is broad-based. It is dragging on private consumption, in particular.
Unlike other risk factors, the way climate change-related developments including policy measures will impact the macro economy is not well understood. Our current activities could be considered as “sensitivity analyses” exploring potential vulnerabilities of the financial system under different assumptions.