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Iran War: 'Harsh Blow' to European Economy, High Oil Prices Threaten Growth
Iran War Delivers Harsh Blow to European Economy
The Wall Street Journal (WSJ) reported on March 16 (local time) that the European economy, already impacted by the COVID-19 pandemic and the Ukraine war, is set to face an even harsher blow due to high oil prices resulting from the Iran War. The WSJ stated that Europe had anticipated rapid growth this year but has encountered a painful reversal due to the conflict. It highlighted that the situation is more challenging than during the Ukraine invasion four years ago, with escalating government debt and soaring borrowing costs. François Villeroy de Galhau, the governor of the Bank of France, commented that there is 'no more money,' signaling the dire state of European finances.
Rising Energy Costs and Recession Risks
Ursula von der Leyen, President of the European Commission, revealed that Europe incurred an additional 3 billion euros in fossil fuel import costs during the first 10 days of the Iran War due to rising oil prices. Soaring energy costs are accelerating deindustrialization in energy-intensive sectors like chemical companies and raising concerns about food price increases due to higher agricultural input costs. Goldman Sachs predicts that Europe will fall into recession if oil prices exceed $125 per barrel, with the United Kingdom, as a net importer of food and energy, expected to be the hardest hit. The Bank of England is now seen as having a two-thirds chance of raising interest rates this year. Furthermore, Germany's KfW Bank forecasts a reduction in German GDP if the Strait of Hormuz is blocked, underscoring the broader economic crisis facing Europe.
*Source: 뉴시스 (2026-03-17)*
