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Tracing the ripple effects of the Middle East war on euro area consumption

Author

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  • Noguera, Neus Dausà i
  • Dimou, Maria
  • Kouvavas, Omiros

Abstract

The onset of the war in the Middle East triggered a sharp deterioration in consumer confidence across the euro area, comparable in magnitude to that observed after Russia’s invasion of Ukraine. This box examines the extent to which the decline in confidence is associated with actual consumption behaviour using microdata from the ECB Consumer Expectations Survey. The analysis reveals that nominal consumption growth softened materially in April 2026, driven mainly by reduced discretionary spending, particularly among higher-income households. Looking ahead, the consumption outlook could face additional downside risks if households were to expect lasting losses in real income. JEL Classification: D12, E21, E32

Suggested Citation

  • Noguera, Neus Dausà i & Dimou, Maria & Kouvavas, Omiros, 2026. "Tracing the ripple effects of the Middle East war on euro area consumption," Economic Bulletin Boxes, European Central Bank, vol. 5.
    • Handle: RePEc:ecb:ecbbox:2026:0005:2
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    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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