Europe Asia News

According to CCTV, European Commissioner for Economy Valdis Dombrovskis said on Monday that the European Union is facing the risk of a stagflation shock as the ongoing conflict in the Middle East pushes up energy prices and clouds the economic outlook.

In an interview while attending the G7 finance ministers meeting in Paris, Dombrovskis stated that in the European Commission’s 2026 spring economic forecast, which will be released later this week, economic growth figures would be revised downward while inflation figures would be revised upward.

Dombrovskis said fears of stagflation have increased in recent weeks due to the closure of the Strait of Hormuz and oil prices remaining above 100 U.S. dollars per barrel, adding that policymakers’ room for maneuver is now “more limited.”

The commissioner said it is important for the bloc to adopt temporary and targeted support measures instead of measures that sustain high demand for fossil fuels.