Tracking European Economic Implications of Middle East Conflict

Goldman Sachs analyzes the economic impact of the Iran/Middle East conflict on Europe, noting a 0.8pp downgrade in Euro Area GDP and a 2.0pp increase in 2026 inflation forecasts.

Key Takeaways

• 1.GDP growth forecasts for 2026 have been downgraded by 0.8pp in the Euro Area due to the Middle East conflict.
• 2.End-2026 inflation forecasts have been raised significantly: +2.0pp for the Euro Area and +1.7pp for the UK.
• 3.European financial conditions (GSFCI) have tightened by approximately 15bp since the start of the conflict.

Table of Contents

• European Economics Team
• Disclosure Appendix

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