By Marta Vilar – MADRID (Econostream) – European Central Bank President Christine Lagarde said on Thursday that expectations of a brief Middle East conflict may be misplaced, warning that its economic impact—particularly on energy supply—could endure for years.
In an interview with The Economist, Lagarde described hopes for a quick return to normal conditions as “overly optimistic.”
“We are facing a real shock…probably beyond what we can imagine at the moment,” she was quoted as saying.
According to Lagarde, ECB experts believe the damage to energy infrastructure and supply was already significant, making a rapid recovery unlikely. She said there was “no way” lost energy capacity could be restored within months, suggesting disruptions could persist for “years”.
She also warned that the full economic consequences may unfold gradually, raising the risk of a “delayed assessment” of the war’s impact.
While the ECB is “well positioned to respond,” Lagarde expressed greater concern about governments’ ability to react, noting that fiscal space was now more limited than during the 2022 energy crisis.
Any government support, she added, should be “tailored, targeted and temporary.”
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