What began as a promising start to 2026 has quickly unravelled. According to Prometeia’s latest quarterly economic outlook, military action against Iran and mounting tensions in the Strait of Hormuz have exposed the deep structural vulnerabilities at the heart of the global economy — chiefly, its dependence on stable energy supplies and open trade routes.
The fallout is being felt across the board. Global growth prospects have weakened, with downside risks tied to the duration of the conflict, potential damage to oil production infrastructure, and how central banks choose to respond to a fresh wave of inflation. In Prometeia’s baseline scenario, no significant loss of production capacity among major oil exporters — including Iran — is anticipated. Even so, the macroeconomic damage from the energy shock is expected to materialise over the coming quarters in the form of higher inflation, tighter financial conditions and a deterioration in business and consumer confidence.
Europe bears the heaviest burden
Europe is absorbing the sharpest growth revision of any major economy. Prometeia has cut its 2026 eurozone growth forecast by 0.4 percentage points compared to its December estimates, now projecting expansion of just 0.8%, down from 1.2%. The continent enters this new crisis from a particularly exposed position: the easing of inflation had been the main driver of recovery in 2025, and the conflict in Iran threatens to reverse that progress. Gas reserves are at record lows, import costs are climbing, and the energy supply diversification undertaken since Russia’s invasion of Ukraine is proving insufficient to cushion the blow, it said.
On the monetary policy front, expectations of further rate cuts in Europe have been replaced by growing anticipation of hikes — fuelled by the memory of how badly policymakers underestimated post-pandemic inflation. Prometeia projects that the European Central Bank (ECB) will signal its commitment to price stability with a 25 basis point rise before the summer.
US resilience tested at the pump
The United States is expected to close 2026 broadly in line with 2025, at around 2.1% GDP growth — supported by carry-over effects from the previous year. But resilience should not be mistaken for immunity. Despite being largely energy self-sufficient, the US has not escaped the conflict’s reach. Petrol prices have surged by more than 30% since late February, consumer confidence has slipped again, and the labour market is showing signs of persistent weakness.
Rising inflation — currently above 3% — combined with labour market uncertainty is weighing on private consumption, the single biggest drag on US growth in Prometeia’s scenario.
China, meanwhile, is projected to grow at 4.3% in 2026, assuming the government introduces additional measures to support domestic demand.
Italy squeezed from all sides
For Italy, the picture is particularly challenging. Prometeia has revised its 2026 GDP growth forecast down by 0.3 percentage points to just 0.4%, from 0.7% in December. Average inflation approaching 3% is eroding household purchasing power, leaving real incomes broadly flat compared to the previous year.
Italy’s exposure to international energy markets is greater than many of its European partners, meaning the pass-through from higher oil and gas prices to domestic inflation is more pronounced. Prometeia’s stress-testing — modelling scenarios in which energy prices remain at current elevated levels through 2028, or rise sharply in line with the 2022 crisis — shows Italy bears a disproportionately heavy burden compared to the eurozone average.
The comparison with the 2022 energy shock is instructive but offers little comfort. Then, the crisis arrived during an expansionary economic cycle; now, it is hitting an already weak one. Italian households face a dual vulnerability — relative to the euro area average and relative to their own position three years ago. Businesses, meanwhile, have less room to pass on higher energy costs, which curbs inflation but compresses margins.
The one significant bright spot is Italy’s National Recovery and Resilience Plan (NRRP). As the programme nears completion, implementation is expected to accelerate in 2026, with projects approaching their deadlines estimated to contribute around 0.3% of GDP to aggregate demand. Without that support, Prometeia warns, Italian growth would effectively stall.
For more insights, read the full report here.
Copyright © 2026 FinTech Global
