By Hans Bentzien
DOW JONES–The EU Commission has lowered its forecast for economic growth in the euro area this year and next year because of the Iran war. As can be seen from the current spring forecast, the Commission now expects gross domestic product (GDP) to increase by just 0.9 (autumn forecast: 1.2) percent in 2026 and growth of 1.2 (1.4) percent in 2027. Growth rates of 0.6 (1.2) and 0.9 (1.2) percent are forecast for Germany, 0.8 (0.9) and 1.1 (1.1) percent for France, 0.5 (0.8) and 0.6 (0.8) percent for Italy and 2.4 (2.3) and 1.9 (2.0) percent for Spain. The forecasts are based on the assumption that energy prices will develop as currently priced in on the futures markets.
“If energy prices develop broadly in line with current market expectations – which assume a relatively rapid, if only partial, normalization of supply conditions – the macroeconomic impact of this shock is likely to be less severe than the previous energy crisis,” writes the Director General of Economic and Financial Affairs, Maarten Verwey, in the foreword to the report.
According to him, the current energy shock is different in many ways from the crisis triggered by Russia’s full-scale invasion of Ukraine. The earlier shock resulted from the shortage of Russian gas supplies to Europe at a time when the EU was still heavily dependent on pipeline imports and had only limited short-term substitution options.
“The EU’s subsequent efforts to quickly reduce dependence on fossil fuels from Russia increased the short-term pressure to adapt. The current shock, on the other hand, is transmitted via globally traded energy raw materials and is therefore more evenly distributed across the global economy,” explained Verwey.
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(END) Dow Jones Newswires
May 21, 2026 05:38 ET (09:38 GMT)