Iran war causes heterogenous shocks across member states

The war in Iran represents a stagflationary shock to the euro area, lifting inflation and weighing on growth, with uneven effects across countries. Italy and Germany face stronger inflation pressures and a larger growth drag than France and Spain. Energy price pass‑through differs due to variations in energy mixes and pricing regimes: Italian electricity prices are most exposed to gas, while France’s nuclear base limits its vulnerability. Government support measures offer only temporary, partial relief and entail fiscal costs. Overall GDP effects also depend on structural factors, leaving Spain relatively resilient and Italy and Germany most exposed.