Paris, March 26 (QNA) – The Organization for Economic Co-operation and Development (OECD) announced Thursday that it has lowered its growth forecast for the Eurozone to 0.8 percent and predicted higher inflation this year, following a sharp rise in energy prices caused by the war in the Middle East.

In its report, the OECD stated that it reduced its Eurozone growth forecast by 0.4 percentage points to 0.8 percent, while lowering growth forecasts for the continent’s two largest economies, Germany and France, by 0.2 percentage points to 0.8 percent each.

The OECD also raised its inflation forecast for the Eurozone by 0.7 percentage points to 2.6 percent.

The report stated that “higher energy prices – and the unpredictable nature of the escalating conflict in the Middle East – will lead to increased costs and reduced demand, which will offset the positive impact of strong investment and production in the technology sector, lower effective rates, and the momentum extending from 2025.”

The report assumes that energy disruptions will ease starting in mid-2026, while warning of the uncertainty surrounding the war.

It notes that “a prolonged period of high energy prices will significantly increase business costs and raise the rate of consumer price inflation, which will have serious consequences for growth.” (QNA)