ECB outlook for euro area economy as of March 2026

The European Central Bank (ECB) released its economic outlook for the euro area on 25 March 2026, presented by Philip R. Lane, Member of the Executive Board.

The outlook includes baseline, adverse, and severe scenarios, focusing on energy supply disruptions, inflation, and economic growth.

In the baseline scenario, no explicit assumptions are made about the duration of the conflict or destruction of energy infrastructure. Energy prices follow the latest technical assumptions as of 11 March 2026, with a limited upward adjustment for potential larger impacts due to energy shocks.

The adverse scenario assumes acute energy supply disruptions with a temporary increase in the VIX index by 10 points, and the severe scenario considers even more severe energy disruptions with a 14-point increase in the VIX, persisting until the end of 2027.

Energy price assumptions are based on ECB staff calculations and market data, including oil prices and synthetic energy price indices, with projections indicating potential medium-sized shocks.

The impact on real GDP growth and inflation is simulated using the ECB-BASE model, considering energy, uncertainty, and trade effects. Under adverse and severe scenarios, GDP growth is negatively affected, and inflation deviates from baseline projections, with larger deviations under the severe scenario.

Consumer confidence, PMI activity, and market-based inflation expectations are also analyzed, showing declines during periods of geopolitical tension and energy shocks. Wage growth indicators and price expectations are included in the assessment.

Further details and specific projections are available in the full ECB report at the provided link.