The Israel-Hamas war could have a significant impact on economic growth and inflation in the euro zone unless energy price pressures remain contained, according to Goldman Sachs .
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.
Concerns are growing among economists that the conflict could spill over and engulf the Middle East, with Israel and Lebanon exchanging missiles as Israel continues to bombard Gaza, resulting in massive civilian casualties and a deepening humanitarian crisis.
She noted that tighter financial conditions could weigh on growth and exacerbate the existing drag on economic activity from higher interest rates in both the euro area and the U.K.
However, Goldman does not see a clear pattern between financial conditions and previous episodes of tension in the Middle EastThe most important and potentially impactful way in which tensions could spill over into the European economy is through oil and gas markets, Vashkinskaya said.
Persons:
Goldman Sachs, Katya Vashkinskaya, Goldman, Vashkinskaya
Organizations:
Israel Defense Forces, Hamas
Locations:
Gaza, Israel, Palestinian, Europe, Lebanon