Analysts at Goldman Sachs indicate that the euro zone economy could confront meaningful headwinds as the Israel Hamas conflict continues. CNBC reported this assessment.
The note highlights that the Middle East escalation may slow the modest growth pace of the European Union’s GDP even if energy costs rise only slightly.
Experts warn that a prolonged clash could push up consumer prices in Europe and fuel inflationary pressures.
Ekaterina Vashkinskaya of London based Europe Economics suggests the Middle East turmoil could become a factor prompting further tightening of monetary policy by the European Central Bank and higher interest rates.
Gregory Daco, who previously led EY-Parthenon as Chief Economist, says the rising hostilities between Israel and Hamas could widen into a regional conflict and threaten the fragile global economy with potential losses around two trillion dollars.
A former political scientist points to factors behind the flare up of the Palestinian Israeli conflict, noting how regional dynamics can influence economic outcomes across continents.