The European Commission is due to present its latest economic forecast on Thursday as the European Union braces for a potential cost-of-living crisis stemming from the war in Iran and the blockade of the Strait of Hormuz.
In its last bi-annual outlook in November, the commission had been cautiously optimistic. The EU's economy was expected to grow by 1.4% in 2026, while the gross domestic product (GDP) of the 21-strong eurozone was expected to increase by 1.2%.
Inflation was expected to be at 2.1% in the EU, and at 1.9% in the eurozone, close to the EU's target inflation rate of 2%.
In April, the International Monetary Fund (IMF) forecasted the EU's inflation rate for 2026 at 2.8% and that of the euro area at 2.6%.
Fossil fuel prices have surged worldwide as a result of the war in Iran and Tehran's blockade of the Strait of Hormuz, a major shipping route.
The German government in Berlin already cut back its economic outlook for 2026 to an expected GDP growth of 0.5%.
