Iran: ECB economists predict -0.4% growth in 2026 due to high oil prices

Brussels – Slowly but surely, bit by bit, the war in Iran is having an ever-greater impact on growth in the eurozone, which is contracting at an increasing rate. The European Central Bank initially estimated a 0.3 per cent contraction in the eurozone’s gross domestic product; however, the Frankfurt-based economists have now revised their forecasts by a tenth of a point, confirming the concerns raised by the European Commission: the war in the region is very likely to “reduce real GDP growth in the euro area by around 0.4 percentage points in the first year,” that is to say in 2026. 

The figure is included in the economic bulletin on the consequences of rising oil prices for EU countries using the single currency. Today (24 June), Brent crude prices fell below 71 dollars a barrel, to their lowest level since March, but the price has broken through the $100 per barrel mark at the height of the war between Iran and the United States. The -0.4 per cent fall in GDP for the eurozone, as highlighted by ECB economists, is the forecast derived from the current yield curve for oil futures contracts and assumes that geopolitical shocks to oil supply account for the majority of the implied changes in oil prices in 2026.

 According to experts at the European Central Bank, “the impact is likely to build up gradually over the course of the year,” and so it will only be in the coming months that a reduced growth rate of 0.4 per cent, due to the ongoing conflict, can be officially confirmed. “This reflects the further substantial rise in oil prices expected in the second quarter of 2026 and the more persistent trend implied by the futures curve.”

 However, everything remains to be seen, as the figures “fluctuate”. “Overall, the extent of the impact of the current shock remains highly uncertain and will depend on the scale and persistence of the rise in oil prices,” warn ECB economists. Even if prices were to fall, however, it seems certain that there will be negative repercussions for the eurozone and its economy: “The effects on economic activity tend to persist beyond the reversal of oil prices themselves; therefore, even a rapid fall in oil prices would still entail significant output losses in the euro area.”