EU Economic Crisis: EU economy to slow as Middle East war hits energy, Dombrovskis says
Published on: May 21, 2026, 11:43 p.m. | Source: Moneycontrol
The European Union is bracing for a slowdown in economic growth in 2026 as the latest war in the Middle East unleashes a fresh energy shock, driving oil prices above $100 a barrel. The European Commission has warned that higher energy costs will fuel inflation, weaken consumer and business confidence, and force tighter monetary policy. While the EU economy ended 2025 on a stronger-than-expected note, officials say the momentum faded sharply from March as the conflict disrupted global energy flows, including through the Strait of Hormuz. Growth forecasts for the euro zone have been cut, inflation estimates raised, and markets are now pricing in further interest rate hikes by the European Central Bank, with the duration of the Middle East conflict seen as the biggest risk to the outlook.
