The inflation outlook is at the forefront of this debate. The latest eurozone data showed price rises for services, goods and food, but energy inflation slowed.
What happens to energy prices over the next six to 12 months is key to understanding the wider macroeconomic picture in Europe, and the outlook for infrastructure assets globally.
Higher inflation forces BoE to pursue rate rise in face of banking crisis
While the hope for a peaceful and rapid resolution of the war in Ukraine remains, the tragic reality is that this is unlikely to happen any time soon, given the build of arms into the region. Therefore, the energy market - linked to the supply of Russian gas - is expected to remain tight throughout 2023.
However, winter so far has been mild, with temperatures above the average seasonal standards. As a result, gas consumption in Europe was reduced by as much as 20% between August and November compared to the previous year. As such, storages are full above seasonal standard and there is widespread conviction that no gas shortages will occur.
To my mind, the market reaction has been short sighted and the second half of 2023 could see an energy inflationary trigger point.
Fed chooses 'lesser of three evils' with 25bps hike
The warmer winter and the filled storages are pushing gas and electricity prices down to lower levels compared to the peaks of summer 2022, but they are still at elevated levels versus to 2021.
Unless Russian gas starts flowing to Europe again, which is almost unthinkable, power prices will remain elevated compared to the past.
Russia's illegal invasion of Ukraine, and the sudden shortage of cheap Russian gas, led European governments to look for other sources of energy and increase the import of liquified natural gas (LNG) via ships and ports, often from the US.
Energy demand
But diversification of energy sources is only part of the picture. The key factor which enabled Europe to keep the lights on this winter was China. As demand for gas surged in the West, China remained in lockdown, so the country's demand for energy was significantly lower than it would have been if the economy was fully open.
All that is about to change. China's reopening will only accelerate in the second half of the year. People are going back to work in offices, factories are coming back online and, with that, comes a surge in demand for energy - and higher prices.
This demand shock is compounded by the global shift away from fossil fuels. The war in Ukraine made the energy transition even more relevant as governments realised renewable energies are key to obtaining energy independence.
UK inflation spike 'unlikely to persist' but could turn sticky
A massive expansion of renewable infrastructure is part of the solution but not all renewables are created equally. Offshore wind is effective but cost and time intensive to build. Battery technology is an exciting prospect but is still some decades away. Natural gas therefore will inevitably play a large role in the move to net zero as a transition fuel.
Again, China knows this too. The country has an ambition to move away from using coal to generate electricity to natural gas, which is currently only 8.5% of its energy mix. Switching from coal to gas would reduce the country's carbon footprint by 55%.
The second half of 2023 will see a surge in demand for natural gas as both Europe and China look to bolster their energy reserves ahead of winter and facilitate their transition away from fossil fuels.
While the West will turn to the US, and China perhaps to Russia, higher demand for LNG across the board could be hugely inflationary to energy costs - a factor which many investors in Europe seem not to have realised.
So, what does all this mean for infrastructure investors?
Energy security will continue to be an important theme. Investments in US pipelines that supply gas to Europe are likely to be the key winners along with those companies with exposure to higher energy prices.
Exposure to commodity pricing will generate more alpha if weather conditions worsen going forward. Otherwise, hedging of power prices will protect companies from decreases in energy costs.
Energy transition will also become more relevant. The boost in money spent in renewable developments must be matched by a greater amount spent in grid development and transformation of transmission grids into "smart" grids and the steep increase in electrification.
If inflation is coming back, many infrastructure investments offer protection embedded in concessions and contracts.
One benefit of investing in infrastructure is that higher financing costs can be passed through to consumers with limited delay, thus not meaningfully impacting companies.
Finally, the defensiveness characteristic of infrastructure and the visibility on long term cash flows give the sector resiliency during downturns and make it a place where to hide during a recession.
Jags Walia is head of listed infrastructure at Van Lanschot Kempen