Economists indicate that the outlook for economic growth in the eurozone has deteriorated from earlier forecasts following a renewed escalation of conflict in the Middle East.

Based on a survey of 56 economists, the median forecast shows the eurozone economy is expected to grow by 0.5% in 2026. This figure is lower than the 0.7% forecast in last month's survey and also below the European Central Bank's baseline scenario prediction of 0.8%.

Recent statements and a renewed intensification of conflict, leading to disruptions in shipping through the Strait of Hormuz, have dampened the optimistic expectations held by economists and ECB officials regarding a normalization of energy supplies.

Economists have also revised down their growth forecasts for 2028 but have maintained their expectations for 2027 unchanged. The median forecast from respondents for the 2026 inflation rate is 2.8%, slightly lower than the result from last month's survey. However, this level remains significantly above the European Central Bank's 2% inflation target.

The survey reveals that the participating economists anticipate the European Central Bank will raise interest rates again in September, further tightening policy following a 25 basis-point hike in June. They also expect the ECB's first interest rate cut to be implemented a year later, in September 2027.