The Israel-Hamas war could significantly impact economic growth and inflation in the euro zone unless energy prices remain contained, Goldman Sachs says.
The ongoing Israel-Hamas war could affect European economies via lower regional trade, tighter financial conditions, higher energy prices and lower consumer confidence, Goldman Sachs said.
The ongoing hostilities could affect European economies via lower regional trade, tighter financial conditions, higher energy prices and lower consumer confidence, Europe Economics Analyst Katya Vashkinskaya highlighted in a research note Wednesday.Although the tensions could affect European economic activity via lower trade with the Middle East, Vashkinskaya highlighted that the continent's exposure is limited, given that the euro area exports around 0.
Goldman's commodities team assessed a set of downside scenarios in which oil prices could rise by between 5% and 20% above the baseline, depending on the severity of the oil supply shock. Gas price developments present a more acute challenge, she suggested, with the price increase driven by a reduction in global LNG exports from Israeli gas fields and the current gas market less able to respond to adverse supply shocks.
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