ECB policymaker says eurozone recession concerns are “real and justified”

Sunday 03 May 2026 - 15:15

A senior European Central Bank (ECB) policymaker has warned that concerns about a possible recession in the eurozone are “real and justified,” citing growing geopolitical tensions and economic uncertainty linked to the conflict in the Middle East.

Yannis Stournaras, Governor of the Bank of Greece and member of the ECB Governing Council, stated that while the eurozone economy remains resilient, its overall momentum has clearly weakened in recent months.

Energy shocks and uncertainty weigh on growth

Stournaras highlighted that ongoing instability in the Middle East could trigger negative supply shocks, particularly through rising energy prices. Given the eurozone’s strong dependence on energy imports, such developments could directly impact both inflation and economic growth.

He added that increased uncertainty tends to discourage investment, further slowing economic activity across the region.

Inflation risks in a weaker growth environment

Unlike previous inflation surges, Stournaras noted that current price pressures are occurring in a context of weaker growth, tighter financial conditions, and reduced fiscal flexibility. This combination, he warned, limits policymakers’ ability to respond effectively.

Although there has not yet been a significant spillover from higher energy costs into broader inflation, he cautioned that damage to energy infrastructure could create medium-term inflationary pressures.

Policy implications for the ECB

According to Stournaras, developments related to the Middle East conflict and potential peace negotiations, particularly involving Iran, will be closely monitored by the ECB as they may influence future monetary policy decisions.

He emphasized that uncertainty remains a key challenge for both inflation control and economic stability in the eurozone.