Domestic economic growth in the second quarter significantly exceeded expectations. Available data indicate that favourable developments are continuing in the third quarter, although growth is expected to be more moderate. The economy therefore remains highly resilient for now, similarly to the euro area, despite the war in the Middle East, higher energy prices and considerable uncertainty. Inflation remains elevated, with higher energy prices and an exceptionally dry summer posing risks to its persistence. In this issue of the Review of Macroeconomic Developments, we provide an additional analysis of the effects of higher energy prices on the economy. We find that their effects are significantly more adverse when higher energy prices result from constrained energy supply than when they are driven by stronger global demand. In such circumstances, the scope for economic policies to mitigate the consequences is also limited, making a coordinated response across different policy areas important.