‘The conflict in the Middle East has triggered a major energy shock,’ said Commissioner for Economy and Productivity Valdis Dombrovskis.
The European Union has said there will be a slowdown in growth as a result of the “energy shock” triggered by the Iran conflict, according to the latest forecast.
In its May 21 executive summary to its spring forecast, the European Commission said that before the start of the Iran war, the world’s economy was gaining momentum, with the EU’s economy “likewise strengthening while inflationary pressures were further abating.”
However, it said that the Iran conflict “materially changed this picture, delivering one of the most significant global energy supply disruptions in recent history—coming less than five years after the energy shock triggered by Russia’s war of aggression against Ukraine.”
The European Commission said it now forecasts gross domestic product (GDP) across the Eurozone to slow to 0.9 percent this year, from 1.4 percent in 2025. It predicts that to rise to 1.2 percent in 2027.
Inflation across the Eurozone will hit 3 percent this year, up from 2.1 percent last year, and higher than the European Central Bank’s target of 2 percent. The commission predicts inflation will then fall to 2.3 percent in 2027.
The Eurozone is the economic region within the EU that comprises 21 of the 27 member states that use the euro.
Across the whole 27-member EU, GDP is predicted to fall in 2026 to 1.1 percent from 1.5 percent last year, then rise to 1.4 percent in 2027.
Inflation in the EU will also hit 3.1 percent this year, up from 2.5 percent in 2025, with a predicted fall of 2.4 percent in 2027.
“The conflict in the Middle East has triggered a major energy shock,” Commissioner for Economy and Productivity Valdis Dombrovskis said in a statement.
“The EU must learn from past crises: keep support temporary and targeted, safeguard public finances, reduce reliance on imported fossil fuels, and accelerate reforms.”
