I have been observing for some time how the geopolitical situation continues to impact the economies of the eurozone in ways that many underestimate. I just reviewed Commerzbank’s recent analysis, and frankly, the numbers are quite concerning for anyone closely following European markets.

The interesting thing is that it’s not simply a trust or sentiment problem. The bank’s economists have identified three very specific channels through which geopolitical instability is constraining growth: volatility in energy prices, supply chain disruptions, and uncertainty that is paralyzing business investments. Energy costs remain about 40% above pre-conflict levels, which sounds like stabilization but in reality continues to be a heavy burden for industry.

Germany is the most visible case. Chemical production has fallen around 15% since this tension began. The automotive sector is in trouble due to component shortages and those unrelenting energy costs. But the eurozone is not monolithic, of course. Southern Europe faces different issues: Greece and Portugal see tourism decline, while Mediterranean countries struggle with fertilizer shortages and skyrocketing transportation costs.

What I find relevant is how the European Central Bank is in an almost impossible position. It must control inflation coming from external shocks in energy and food, but at the same time, it sees clear signs of economic slowdown. It’s that balancing act that becomes more complicated each quarter.

Specific data is revealing: Germany projects a GDP decline of around 2.3%, France about 1.8%, Italy 2.1%. They are not catastrophic numbers, but they are not what you’d expect from the eurozone under normal circumstances. What catches my attention most is that this is not like the 2011 debt crisis. That came from internal problems, fiscal imbalances. This comes from external factors that no individual government can easily control.

Policy responses have varied by country. Germany implemented more aggressive fiscal support packages, while Italy and Spain have been more cautious. That creates friction in coordination across the entire eurozone. REPowerEU aims to accelerate energy independence, but the reality is that transitioning to renewable energies and new supply sources will take years, not months.

A detail many forget: foreign direct investment is changing. Asian and North American companies are reconsidering their European operations based on risk criteria that now include energy security and geopolitical stability. Some multinationals are already diversifying production outside the eurozone. This has long-term implications for European industrial competitiveness that go beyond this year.

For market watchers, this means that eurozone growth prospects will remain limited until these structural factors are resolved. It’s not a problem that will disappear with an ECB announcement or a fiscal package. It’s a years-long adjustment in how the European economy functions.