ECB: Energy shock could have an impact of 0.4 percentage points on eurozone GDP in 2026
However, the study was completed before the US-Iran MoU
(Il Sole 24 Ore Radiocor) - The energy shock caused by the war with Iran could reduce growth in the eurozone by around 0.4 percentage points in 2026. This is the estimate contained in an analysis published by the ECB, which assesses the impact of the rise in oil prices caused by the war in Iran and the closure of the Strait of Hormuz. According to the study by ECB economist Johannes Gareis, the effect was estimated by comparing the current oil shock with a series of similar events that have occurred since 1985, analysing the effects on economic activity, private consumption, investment, inflation and interest rates.
"Using the current oil futures curve and assuming that geopolitical shocks to crude oil supply account for most of the implied price changes for 2026, it is estimated that the war in the Middle East will reduce real GDP growth in the euro area by around 0.4 percentage points in the first year”, writes Gareis in a preview of the central bank’s economic bulletin. The study was completed prior to the latest diplomatic developments, namely the signing of the ceasefire agreement between the United States and Iran – factors which could help to ease some of the pressure on energy markets should they lead to a normalisation of oil flows through the Persian Gulf.
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