Blog | Geopolitical shocks influence consumer expectations about inflation and growth. This blog explores how the wars in Ukraine and Iran affect the way households think about the economy and shows how the scars of past experiences amplify reactions to subsequent geopolitical conflicts. Recent movements in euro area consumers’ inflation and growth expectations show that geopolitical shocks influence households’ economic beliefs. Drawing on the ECB’s Consumer Expectations Survey (CES), this blog post compares households’ reactions to the 2022 invasion of Ukraine with...

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Blog | As governments intervene more, evidence shows that the benefits are modest and depend on thoughtful design. Industrial policy, the use of government interventions to support or develop specific firms and industries, has grown more popular in recent years—especially in response to crises. The war in the Middle East is the latest example, with high energy prices and geopolitical upheaval prompting action. In addition to economy-wide support measures, such as fuel price caps and reduced excise duties, at least 305...

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Executive summary Before the outbreak of the conflict in the Middle East, the global economy was gaining momentum. A challenging geopolitical environment and US tariff uncertainty continued to weigh on growth, but easing inflation and a robust investment cycle related to the unfolding AI revolution provided important support. The EU economy was likewise strengthening while inflationary pressures were further abating. Weak competitiveness was a source of concern and public finances required attention, but the economy also showed resilience, including a...

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Blog | The economic shock caused by the war between the United States and Iran has quickly fed into euro area firms’ expectations. Daily responses to an ECB survey show an immediate increase in expected input costs, selling prices and short-term inflation. Firms' expectations for costs, prices and the broader macroeconomic environment are central to their decisions on wages, investment and employment. These decisions, in turn, determine how economic shocks are transmitted to the economy. When a major geopolitical event occurs,...

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Corrigendum: In the OECD GDP release published on 21 May 2026, the quarter-on-quarter growth for Italy in the first quarter of 2026 is 0.2%, and not 0.1% as initially published in the last sentence of the second paragraph. GDP (Gross Domestic Product) growth in the OECD area increased slightly to 0.4% in Q1 2026, up from 0.2% in the previous quarter, according to provisional estimates (Figure 1). This reflects a mixed picture across the 28 OECD countries for which data was...

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Blog | Governments can protect vulnerable households, keep businesses open, and preserve price signals without straining public finances. When global energy prices spike, governments face an unenviable dilemma: shield people and businesses while straining already reduced room in public budgets—or let prices rise for everyone and risk social and political backlash. So, how can policymakers do the best of both? To be sure, there is no one-size-fits-all response because the impact of the war in the Middle East differs widely across...

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