Middle East, alarm from ECB and WTO: inflation on the rise and growth slowing down

The war in the Middle East alarms economic organizations. The president of the European Central Bank, Christine Lagarde, outlined during the press conference how the institution has developed two specific alternative scenarios to the baseline scenario, one in case of "adverse" and the other in case of "severe scenario": «The estimates are significantly higher for inflation and lower for growth» Lagarde said. These are the macroeconomic estimates, which in both simulations indicate significantly higher inflation and decidedly lower economic growth compared to initial expectations. «We ensured that the members of the Governing Council were well-informed by war experts. We had a professor of defense and military affairs who updated us the day before the meeting. Regarding state aid and merger incentives, we will carefully examine, including what concerns the banking sector», Lagarde explained.

Also due to the war, the WTO (World Trade Organization, the international organization that deals with the rules of trade between nations) has issued a serious warning regarding the fact that the conflict in the Middle East could further weigh on a global trade that is already in a slowdown phase. According to the WTO, the volume of merchandise trade could grow this year by 1.9% after 4.6% in 2025. In 2027, the increase will be 2.6%. «Prolonged increases in energy prices could heighten risks for global trade - said the WTO Director-General, Ngozi Okonjo-Iweala - with potential repercussions on food security and cost pressures for consumers and businesses».

) has issued a serious warning regarding the fact that the conflict in the Middle East could further weigh on a global trade that is already in a slowdown phase. According to Wto, the volume of merchandise trade could grow this year by 1.9% after 4.6% in 2025. In 2027, the increase will be 2.6%. "Prolonged increases in energy prices could heighten risks for global trade - said Wto Director-General Ngozi Okonjo-Iweala - with potential repercussions on food security and cost pressures for consumers and businesses."