Dombrovskis announced an impending crisis in Europe 0 16

The economic growth rate of the European Union (EU) may significantly slow down due to the consequences of the war between the United States and Israel in Iran. This was stated by European Commissioner Valdis Dombrovskis, as reported by Reuters.

In the event of a prolonged war in Iran, he warned, the EU's economic growth rate will slow down by 0.6 percentage points (p.p.) compared to the autumn forecast. The same trend will continue next year, Dombrovskis noted. "The negative consequences for the EU's economic growth will be significant," the Commissioner concluded.

In this scenario, the region is likely to face stagflation amid a simultaneous acceleration of inflation, he added. However, even in the case of a quick recovery of energy resource exports from the Middle East, he concluded, the EU's economic growth will slow down by 0.4 p.p. compared to the autumn forecast.

The main risks for the European region, experts noted, include the rapid increase in the prices of key energy resources (oil, natural gas, and liquefied natural gas). All of this could lead to a prolonged decline in industrial production volumes in key EU countries such as Germany and Italy, Bloomberg reported.