Will the same causes produce the same effects? In other words, will the outbreak of war in Iran and the associated surge in oil prices (+44% to date) and gas prices (+64%) lead to an inflationary shock comparable to that of 2022? Will their negative effects on growth be the same as those of the war in Ukraine and the ensuing energy shock (a rise in oil prices of around 30% between 23 February and its peak in early June 2022, and a rise in gas prices of around 210% between 23 February and the peak in late August 2022)? The risk cannot be ruled out. Indeed, there are similarities and numerous uncertainties.
Asset prices have been moving in unusual ways since the onset of the Gulf War (no safe havens, limited dollar rally and de-risking). Do financial markets know something we don’t, has something fundamentally changed in the way asset prices reflect economic expectations, or are they simply malfunctioning and about to swing wildly as things normalise? Unfortunately, it is impossible to know for sure, and what’s more, these hypotheses are not mutually exclusive. So far, markets appear to expect an inflation spike, met with a firm central response, with limited damage to growth, and a relatively swift return of inflation to target range. That may turn out to be correct. But far worse outcomes are also very plausible
Inflation in both the Eurozone and France is expected to return to levels not seen since the summer of 2024. In March, we forecast 2.6% y/y in the Eurozone (compared with 1.9% in February). In France, where inflation is starting from a much lower base (1.1% in February), it is expected to reach 1.7% y/y in March, rising to 2.1% in May. This rebound in inflation is attributable to the sharp increase in energy prices, which has not yet been passed on to core prices. Business surveys point to a rebound in input prices. However, they do not currently suggest an increase in selling prices in the second quarter, either in France or in the Eurozone. Nevertheless, a rebound in core inflation is expected from the second half of the year
During her hearing on 18 March 2026 before the Committee on Economic and Monetary Affairs of the European Parliament, Claudia Buch (Chair of the Supervisory Board of the European Central Bank) highlighted the absence of decline in the quality of bank assets and the stability of non-performing loan ratios. These ratios are a good indirect indicator of the financial health of borrowing corporations in the European Union (EU), particularly in the manufacturing sector. When viewed from this perspective, the proportion of firms in this sector facing severe financial difficulties appears to be lower at the start of 2026 than at the start of 2022. This suggests, by extension, that these firms are in better financial health and have a greater ability to absorb shocks
The conflict in the Gulf has escalated in recent days, with an increase in strikes targeting oil and gas facilities (on both sides). The impact on energy prices has therefore intensified. A relatively rapid de-escalation of the conflict is unlikely, whilst there is a growing prospect of the conflict worsening along with its macroeconomic effects (higher inflation, lower growth). Central banks have taken note of this this week, but are waiting for greater clarity on how events will unfold before deciding how to respond. The markets, too, are taking a more cautious stance and anticipate that central bank will adopt more restrictive policies than previously expected for over the rest of the year. So do we.
For several years, Central Europe has been facing a marked demographic decline. Its magnitude varies from one country to another. The total population decline from 2004 to 2025 ranges from -0.3% in Slovakia to -17.2% in Bulgaria. The Czech Republic is the only country in the region to have seen a population increase over the same period. The working-age population (ages 15–64) is also declining. However, the situation is less unfavourable in Hungary, Poland, the Czech Republic and Slovakia, while Romania and Bulgaria are experiencing a more significant decline due to migration patterns. Net migration flows were negative for Bulgaria until 2019 and for Romania until 2021. However, this trend has reversed in recent years
As in 2022, the energy shock will affect emerging and developing economies. Today, as in the past, this shock is a negative-sum game between importing and exporting countries. Furthermore, although this is basically a supply shock, central banks in emerging economies may tighten their policies if they need to counter downward pressure on exchange rates, in order to prevent inflation from rising too sharply. However, compared to 2022, there are mitigating factors: 1/ the absence of a shock to agricultural commodity prices so far; 2/ AI, which is an external growth driver for Asian countries in particular; and 3/ the Fed is expected to adopt a more accommodative stance than in 2022 in response to the anticipated rise in inflation
The conflict in Iran has put an end to the moderation in commodity prices, which had helped to reduce inflation in Europe. This disinflation enabled the ECB to lower its key interest rate, which contributed to the rebound in growth in 2025. The conflict could reverse these trends, with the extent of the reversal depending on the still highly uncertain outcome of the conflict in the coming weeks.
The conflict in Iran is already having a significant impact on energy prices, particularly oil and gas. Inflation should therefore rise in March. Beyond that, the outlook will depend on the evolution of the conflict, but the situation remains highly uncertain.Three types of scenarios are plausible:1) A return to the status quo ante on the hydrocarbon market after a few weeks;2) A prolonged period of political uncertainty in Iran leading to a relatively modest, but sustained, rise in oil and gas prices;3) Acute and sustained tensions over oil and gas supplies. The latter two scenarios would constitute a stagflationary shock, i.e. one that slows growth and increases inflation.Fortunately, growth was generally robust on the eve of the shock
The development of artificial intelligence (AI) depends largely on the availability of abundant and reliable electricity. The sector currently accounts for 4.5% of electricity demand in the United States, 2% in Europe and around 1% in Asia (including China), where the vast majority of data centres are located. In contrast, this figure is less than 0.5% in the rest of the world, but is set to increase in the coming years. To attract investment in the AI sector, emerging countries must therefore consider significantly increasing their electricity generation capacity and establishing networks capable of continuously powering data centres. Massive investments in infrastructure, along with the use of flexible energy sources (gas, renewables), are assets for attracting AI projects
Economic growth remains strong, with a positive short-term outlook fuelled by the rebound in oil production and the performance of the private sector. However, this growth coincides with widening twin deficits. The investment requirements of the Vision 2030 transformation initiative are straining public finances and external accounts, both of which are currently in deficit, while also affecting the banking sector. The authorities are adjusting their diversification strategy, but the anticipated drop in oil prices is expected to continue to exert pressure on public finances in 2026. The country still has ample financial leeway, and its ambitions remain intact. In fact, priority is now being accorded to developing strategic sectors, particularly artificial intelligence.
Key aspects of European policy, the low carbon transition and energy sovereignty programmes converge on many issues. Rising geopolitical tensions, the European energy crisis of 2022 and heightened international trade tensions have contributed to this convergence. At first glance, it seems obvious: Europe, which is structurally dependent on fossil fuel imports, has an interest in accelerating the decarbonisation of its energy mix in order to reduce its hydrocarbon imports. Nevertheless, the progress of the transition-sovereignty pairing remains a path fraught with obstacles.
When Donald Trump ran and won in 2024 on a campaign to “make America Great Again” by building a tariff wall around the US, very few voices rose to defend free trade, outside of international organisations whose creed it is to defend it. After “Liberation Day”, economic forecasters braced themselves for a global trade war. But nothing of the sort happened. Instead, 2025 ended up being an all-time record year for trade liberalisation measures. 2026 is not even two-month-old and has already seen several giga-trade deals signed, two of which by India, one of the countries with the highest tariffs in the world, and there are more signs that the tide is turning
Optimism surrounding the deployment of artificial intelligence (AI) has become a key driver of economic growth in the United States. But this is not without its drawbacks: the energy-intensive nature of AI is putting pressure on the electricity markets and pushing prices higher – a trend that is set to continue in 2026. This poses a challenge not only for the competitiveness of American businesses but also, due to the resulting inflationary pressures, for households. It also creates a political problem for the Trump administration as the midterm elections draw near, where the issue of affordability will take centre stage
In the energy sector, the European Union has two objectives: to continue the low-carbon transition in order to reduce greenhouse gas emissions; and to increase its energy sovereignty in a context of rising geopolitical tensions.
2025 saw a renewed appetite among European consumers for electric cars. This enthusiasm comes after a lacklustre 2024, when registrations stagnated following the late 2023 announcement regarding the reduction of budgetary support in France and the complete withdrawal of such support in Germany. Yet, numerous studies, including the joint report by Pisani-Ferry and Mahfouz, had deemed these subsidies crucial.
In its fight against global warming, the European Union is about to take an important step: the launch of the operational phase of its Carbon Border Adjustment Mechanism (CBAM). How will it work? Who will be affected? What will be the economic consequences? These questions (and a few others) are addressed below.
Since the cessation of most Russian gas supplies, reducing Europe's energy vulnerability, and thus improving its economic security, has been a key issue for European decision-makers. However, recent pressure from the United States on Europe to increase its purchases of US hydrocarbons could raise fears of a new significant dependence on US liquefied natural gas (LNG)..
The French economy is entering a new budgetary cycle that is likely to be as complicated as the previous one. However, the economy appears to be more robust than in 2024. Firstly, the productive sector is in better shape today in several key areas (notably aeronautics and agriculture), which is reflected in the growth figures. Secondly, the shadow of political uncertainty has not undermined the strengths of the French economy: business creation, the labour market, a balanced current account, the transmission of ECB rate cuts to the private sector and the improvement in private investment
In the first half of 2025 (H1 2025) and according to the Carbon Monitor website, China would have reduced its carbon dioxide (CO2) emissions by around 3% compared to the same period last year. Even if this is good news coming from the world's largest CO2 emitter (30% of the total), this is not surprising given the slowdown in the energy sector. In the same first half of 2025, the growth in electricity production slowed to 2.3% year-on-year, which is low by Chinese standards. Historically well correlated with emissions, weak electricity output largely explains the above-mentioned figure.
The volatility of oil prices reflects the uncertainties of the international environment. After falling in April following President Trump's announcement of "reciprocal" tariffs, oil prices rose by around ten dollars during the 12 days of conflict between Iran and Israel, before falling again since the ceasefire agreement.
Last December, the Economic Research department of BNP Paribas invited you to discuss the consequences of Donald Trump's return to power on the global economy and its repercussions on energy and climate issues.Six months on, it is time to take stock of his second term's turbulent start. Faced with threats to trade and a new logic of negotiation by force, how will the United States' trading partners react? Will we see new alliances emerge or existing ones strengthen? How will China position itself? What about Europe?
Donald Trump has, for the most part, taken a wait-and-see approach following his destabilising announcements on trade tariffs. Nevertheless, the damage has been done and uncertainty remains high. Both growth and financing of the US economy could be affected. For the time being, the oil sector appears to be holding up well.
European energy policy is focused on two objectives: firstly, to progress in the low-carbon transition to reduce greenhouse gas emissions, and achieve carbon neutrality by 2050, and secondly, to increase energy sovereignty by diversifying sources of supply and reducing external dependencies.
Since the Paris Agreement (2015), the green bond market has been on the rise. Although still modest on a global scale (USD 2,900 billion, which is barely 2.5% of total bond outstandings), its size has more than quintupled over the last five years. The eurozone has been the driving force behind this take-off, followed at a distance by the United States and China.
