Outlook for the euro area economy MacGill Summer School Glenties, Co. Donegal, Philip R. Lane 24 July 2026 Member of the Executive Board Outlook and scenarios for energy commodity prices Oil prices, gas prices, and synthetic energy commodity price index are presented with December 2025 projections and June 2026 baseline, severe, milder, and adverse scenarios. Latest future curves are cut off at 23 July. Latest 25th, 75th, and 95th percentiles are shown for all three commodities across 2026-2028. Exchange rates and commodity prices USD/EUR and NEER (nominal effective exchange rate for 17 trading partners) are shown on left-hand scale as levels and right-hand scale as index (1999 = 100). Non-energy commodities including metals and food are indexed at 2020 = 100. June GovC refers to 10 June 2026. Latest observations are for 23 July 2026 for exchange rates and 17 July 2026 for commodities (weekly data). Global growth and trade World real GDP growth (excluding euro area) shows quarter-on-quarter percentage changes from Q1 2025 through Q1 2026. World import growth (excluding euro area) also displays quarter-on-quarter percentage changes for the same period. Latest observations are for the first quarter of 2026. Supply shortages and delivery times PMI supply shortages index shows June 2026, May 2026, and February 2026 data across various sectors including food, industrial goods, automobiles, polymers, stainless steel, aluminium, chemicals, and technology equipment. Global PMI supply delivery times show average contribution of shocks between March and June 2026, decomposed into demand and supply components by sector. Latest observations are for June 2026. Imports by category and global pipeline price pressures World goods imports (excluding euro area) by category show year-on-year percentage changes for 2024-2026, with deviations from 2019-23 mean. AI-related and semiconductors category includes upstream and downstream items plus high-tech sub-categories. Producer price inflation for manufacturing shows percentage point differences between March-May 2026 (war period) and December-February 2026 (pre-war). Freight rates for USD/40 ft containers show spot rates for major east-west trade routes. Latest observations are for April 2026 for imports, May 2026 for producer prices, and 23 July 2026 for freight rates. United States and China: Outlook for activity US GDP forecasts from Consensus Economics show year-on-year percentage changes with moving averages for 2026-2027. China GDP forecasts similarly display year-on-year percentage changes with moving averages for 2026-2027. Consensus Economics series are calculated daily as moving averages of latest revised forecasts. Latest observations are for 3 July 2026. Short-term outlook PMI indicators show composite and sectoral activity (manufacturing and services) as diffusion indices. Dashed lines indicate average values from 2015-2019. Data includes output, new orders, and expected activity. Latest observations are for July 2026. Private consumption Private consumption and high-frequency indicators show quarter-on-quarter percentage changes (left-hand scale) and standardised balances (right-hand scale). Consumer confidence and consumer expected activity are included. Private consumption and income and savings components show year-on-year changes in percentages and percentage points, including labour income, non-labour income, savings, and private consumption deflator. From Q2 2026 onwards, data reflect Eurosystem June 2026 staff macroeconomic projections. Latest observations are for Q1 2026 for private consumption, June 2026 for consumer expected activity, and July 2026 for consumer confidence. Housing and business investment Housing investment and high-frequency indicators show quarter-on-quarter percentage changes (left-hand scale) and balances/percentages/diffusion index minus 50 (right-hand scale). Composite building construction output and EC composite building trend activity are included, along with PMI housing output. Business investment and high-frequency indicators show quarter-on-quarter percentage changes and percentage points (left-hand scale) and balances/percentages (right-hand scale). Contributions from intellectual property products and tangibles are shown, along with EC confidence for capital goods and intangibles. Business investment is measured as non-construction investment excluding Irish specialised intellectual property products. Intangibles confidence is the weighted average of publishing, computer programming/consultancy, and information service activities. Latest observations are for Q1 2026 for investment and June 2026 for confidence. Euro area goods trade and import prices Export and import volumes of goods show 3-month moving averages with December 2024 = 100. Euro area goods import prices are indexed at December 2024 = 100, showing total, energy, China, and AI-related goods. AI-related goods classification is based on identification of core datacentre goods, datacentre infrastructure, upstream AI goods, and broad industrial goods used in AI production. Latest observations are for May 2026 for volumes and March 2026 for AI-related goods, April 2026 for total and energy, and May 2026 for China. Euro area trade and role of AI-related goods Share of AI-related goods in total extra euro area trade shows percentages of total trade for exports and imports from March 2023 through March 2026. Trade in AI-related goods and subcomponents shows percentage of total trade with annual growth rates for 2024-2025. Data is broken down by euro area, US, and rest of world, with subcategories for total AI-related trade, core AI goods, infrastructure AI goods, and other AI-related goods. Latest observations are for March 2026 for shares and 2025 for growth rates. Labour market developments Change in the number of unemployed shows year-on-year percentage changes and percentage point contributions by country (Germany, France, Italy, Spain, Netherlands) and S16 (16 smallest euro area countries). PMI employment shows diffusion index for composite, construction, manufacturing, and services sectors. LinkedIn hiring rate shows index from June 2025 baseline. Latest observations are for May 2026 for unemployment, July 2026 for PMI employment, and June 2026 for LinkedIn hiring rate. Labour market developments (continued) Employment growth decomposition shows year-on-year percentage changes and percentage point contributions by sector including information and communication technology, professional services and financial activities, public services, wholesale/retail, industry, construction, and other sectors. Labour force growth decomposition shows year-on-year percentage changes with contributions from population and participation rates of nationals and non-nationals. Euro area labour productivity shows year-on-year percentage changes for labour productivity growth and labour productivity growth excluding Ireland. Latest observations are for Q1 2026. Fiscal policies Euro area fiscal stance shows percentage points of GDP for 2025-2028, calculated as the change in cyclically adjusted primary balance adjusted for NGEU grants. Negative numbers reflect fiscal loosening and positive numbers reflect fiscal tightening. Main fiscal measures in the euro area since June projections show percent of GDP, categorised as measures with direct impact on inflation (affecting price levels or wages) and measures with indirect impact on inflation (affecting demand or supply). New measures refers only to measures announced following the cut-off date of June 2026 projections. Latest observations reflect June 2026 projections. Inflation developments and outlook Headline inflation and main components show annual percentage changes and percentage point contributions from services, non-energy industrial goods, food, and energy. Forecasts for HICP and HICPX show annual percentage changes from quantile regression forest median (17 July 2026), Consensus Forecast (16 July 2026), HICP fixings excluding tobacco (20 July 2026), and June 2026 projections. Latest observations are for June 2026. Energy inflation Energy inflation and outlook show annual percentage changes and percentage point contributions from electricity, gas, transportation fuels, and other components, with June 2026 projections. Crack spreads show EUR per barrel for refined petrol, refined diesel, and refined jet fuel. Crack spreads represent refining margins showing the difference between refined product prices and Brent crude oil price. Latest observations are for June 2026 for inflation and the week of 20 July 2026 for crack spreads. Food inflation Drivers of euro area consumer food price inflation show percentage point deviations and contributions from energy producer prices, global food commodity prices, euro area farm gate prices, euro area producer prices for the food industry, and unexplained factors. Food inflation outlook shows annual percentage changes from machine learning model mean (17 July 2026), short-term inflation projection food (17 July 2026), and June 2026 projections. The machine learning model averages predictions from linear and non-linear tree-based models. Latest observations are for June 2026. Goods and services inflation Non-energy industrial goods inflation shows annual percentage changes with short-term inflation projection (17 July 2026), June 2026 projections, and quantile regression forest median (17 July 2026). Services inflation similarly shows annual percentage changes with the same forecast sources. Short-term inflation projection for services employs a BVAR model with multiple variables and is conditioned on ECB staff assumptions. Latest observations are for June 2026. Underlying inflation Measures of underlying inflation show annual percentage changes for HICPX, HICPXX, HICP excluding unprocessed food and energy, supercore, HICP excluding energy, trimmed means (10% and 30%), persistent and common component of inflation, and domestic inflation. Adjusted underlying inflation measures and pass-through of energy shock show annual percentage changes and percentages for adjusted measures and cumulated impulse responses after 6, 12, and 24 months. Results are based on BVAR with energy price shocks. Latest observations are for June 2026. Domestic price pressures Euro area GDP deflator excluding volatile Irish data shows annual percentage changes and percentage point contributions from unit labour costs, unit taxes, and unit profits. Total supply deflator is broader than GDP deflator as it accounts for import costs. PMI profit margins show z-scores in standard deviations for industry, services, and total, constructed as the gap between PMI output and input prices. Latest observations are for Q1 2026 for GDP deflator and June 2026 for PMI profit margins. Wage developments ECB wage tracker shows annual percentage changes including the tracker and tracker excluding one-offs. Survey-based wage expectations show annual percentage changes from Survey of Professional Forecasters Q3 2026, Consensus July 2026, Corporate Telephone Survey July 2026, and SAFE Q2 2026. SAFE asks about 12-month-ahead wage growth while other surveys are for calendar years. Latest observations are for March 2027. Inflation expectations CES and SAFE inflation expectations show annual percentage changes for 1, 3, and 5 years ahead from February through June 2026. SPF and SMA inflation expectations show annual percentage changes for 1, 3, and 5 years ahead with mean for SPF and median for SMA. SPF long-term is either four or five years ahead depending on survey timing. Decomposition of euro area inflation-linked swap rates shows percentages per annum for February through April 2026 and long-term rates. Market-based ILS rates reflect both genuine inflation expectations and inflation risk premium. Premia-adjusted rates strip out risk premium to provide expected inflation by markets. Latest observations are for June 2026 for CES and SAFE, Q3 2026 for SPF, June 2026 for SMA, and 23 July 2026 for ILS rates. €STR forward curve and long-term risk-free rates €STR forward curve and survey expectations of the deposit facility rate show percentages per annum with realised €STR, forward curves at different dates, adjusted forward curve for term premia, option-based percentiles, and SMA median (July 2026). Decomposition of changes in 10-year euro area OIS rates shows basis points for real rate, inflation, term premium, and expectation components. Real rate is calculated by subtracting inflation-linked swap rate from nominal OIS rate. Estimates of term premia and expectations components are based on affine term structure models. Latest observations are for 23 July 2026. Financial and broad intermediation conditions Decomposition of the Macro-Finance Financial Conditions Index shows changes since start of year and June GovC (10 June 2026) for short rate (€STR), long rate (10y OIS), real rates (1y1y and 5y real OIS), sovereign spreads (2y and 10y), risk assets (investment-grade corporate spreads and CAPE), and euro FX (NEER). The Broad Intermediation Gauge index uses BVAR model with mixed-frequency to derive credit conditions measure. Price components include lending rates and Macro-Finance FCI; quantity components include credit volumes and bank lending survey data. Latest observations are for 23 July 2026. Monetary aggregates, bank funding costs and lending rates Sources of money creation show monthly flows in EUR billions (left-hand scale) and annual percentage changes (right-hand scale) for other counterparts, decline in central government deposits, bank long-term liabilities, bank credit to general government, Eurosystem net purchases, net external monetary flows, and loans to firms and households. Changes in bank funding costs show basis points for composite funding costs, overnight deposits, redeemable at notice deposits, time deposits, interbank rate, bank bond yields, and cost of market-based debt. Changes in firm and household costs of financing show basis points for composite bank lending rates on loans up to 1 year, loans over 1 year and up to 5 years, loans over 5 years, and household mortgages. Latest observations are for May 2026 for monthly data and 23 July 2026 for daily rates. Loans to firms Credit to firms in the euro area shows average monthly flows in EUR billions (left-hand scale) and annual percentage changes (right-hand scale) for borrowing from banks, use of alternative finance, and other financing needs. Changes in credit standards for loans to firms show net percentages of banks reporting tightening for banks' risk tolerance, risk perceptions, general level of interest rates, competition, and cost of funds and balance sheet constraints. Changes in demand for loans to firms show net percentages of banks reporting increase for fixed investment, inventories and working capital, and other factors. Credit standards and demand show both actual and expected values. Latest observations are for May 2026 for credit flows and Q2 2026 (past) and Q3 2026 (expected) for credit standards and demand. Loans to households Loans to households in the euro area show average monthly flows in EUR billions (left-hand scale) and annual percentage changes (right-hand scale) for loans for house purchase and credit for consumption. Changes in credit standards for housing loans show net percentages of banks reporting tightening for banks' risk tolerance, risk perceptions, general level of interest rates, competition, cost of funds and balance sheet constraints, and housing market prospects. Changes in demand for housing loans show net percentages of banks reporting increase for use of alternative finance, other financing needs, consumer confidence, and other factors. Credit standards and demand show both actual and expected values. Latest observations are for May 2026 for loan flows and Q2 2026 (past) and Q3 2026 (expected) for credit standards and demand. Survey of Monetary Analysts (SMA) – DFR expectations and balance of risk Expected Deposit Facility Rate level at Governing Council meetings shows percentage of respondents for meetings in 07/26, 09/26, 12/26, and 06/27, as well as quarterly frequency for Q4 2027 and Q4 2028, and long-term outlook. Total response counts are 70 respondents for DFR expectations at GovC meetings and quarterly frequency, and 67 respondents for long-term DFR outlook. Balance of risk surrounding euro area inflation and growth outlook shows percentage of respondents. Percentages may not add up to 100 due to rounding.