EU Economic Commissioner: Risks of Stagflation Impacting European Economy

On April 9, EU Economic Commissioner Valdis Dombrovskis stated in the European Parliament that the EU faces the risk of concurrent inflation and economic stagnation due to the war in Iran. He pointed out that despite the announcement of a ceasefire this week, the long-term outlook remains shrouded in significant uncertainty. Dombrovskis warned that the European economy is at risk of stagflation. He indicated that EU analysis suggests that in a short-term disruption scenario, economic growth could be approximately 0.2 to 0.4 percentage points lower than the EU's predictions from last autumn, while inflation could be 1 percentage point higher. He stated: If supply disruptions are more severe and prolonged, the negative impact on growth will be greater. Growth in 2026 and 2027 could be 0.6 percentage points lower, with inflation being even higher.