Tracking the European Economic Implications of the Middle East Conflict

Goldman Sachs tracks the European economic fallout of the Iran-Middle East conflict, noting a 0.2pp drag on annual growth and a 1.4pp spike in 2026 inflation forecasts.

Key Takeaways

• 1.The current economic shock from the Middle East conflict is viewed as more contained for natural gas than the 2022 peak, though oil shocks may be more persistent.
• 2.Goldman Sachs' proprietary model indicates a 0.2pp drag on European GDP growth this year specifically due to the energy shock.
• 3.Euro area inflation forecasts for end-2026 have been revised upward by 1.4pp, while GDP growth forecasts were downgraded by 0.8pp.

Table of Contents

• European Economics Team
• Disclosure Appendix

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