EU faces stagflationary shock due to war with Iran and rising energy prices
Kyiv • UNN
Valdis Dombrovskis stated that the EU economy is slowing down and inflation is rising. New forecasts will depend on the conflict and energy prices.
The European Union has come under the influence of a stagflationary shock amid the war with Iran and rising energy prices. This was reported by Bloomberg, citing European Commissioner for Economy Dombrovskis, according to UNN.
Details
European Commissioner for Economy Valdis Dombrovskis stated that rising energy prices are simultaneously slowing down the economy and increasing inflation.
Higher energy prices are affecting firms and households, pushing the EU economy toward weaker growth and higher inflation. Europe is facing a stagflationary shock,
Estimates and Forecasts
Eurogroup President Kyriakos Pierrakakis noted that economic forecasts are already being revised toward lower growth and higher inflation; however, full-scale stagflation has not yet been recorded.
According to Dombrovskis, the European Commission's new economic forecasts will be released in the near future, and their indicators will depend on the development of the conflict and the impact on energy supplies.
Constraints on Economic Support
The EU emphasizes that the capacity for large-scale financial support is limited due to high debt levels, deficits, and the need to increase defense spending.
Our room for maneuver is already limited. We cannot afford to repeat the mistakes of the past,
At the same time, the EU believes that the economies of the bloc's countries are currently better prepared for energy shocks than in previous years.