I just noticed something that probably many in the markets are still not fully processing. Earlier this week, the EU Commissioner for Economy issued a pretty serious warning about the stagflation risks facing Europe, and honestly, the current geopolitical context makes this concern more relevant than ever.

The interesting part is that it’s not just speculation. Dombrovskis was quite specific with his numbers. If supply disruptions occur in the short term, economic growth could fall by 0.2 to 0.4 percentage points below what was projected months ago, while inflation would rise by about 1 percentage point. That’s already a complicated scenario.

But here’s where things get more tense. If these disruptions are prolonged and intensify, we’re talking about a growth decline of 0.6 percentage points in 2026 and 2027, with even greater inflationary pressures. In other words, stagflation is not just a theoretical risk but a scenario that EU analysts are seriously modeling.

What catches my attention is that despite the ceasefire announcement this week, European officials continue to warn that long-term uncertainty remains significant. It’s not a problem that disappears overnight. The European economy is in a vulnerable position where stagflation could become a reality if things get more complicated on the geopolitical front.

This has clear implications for the markets. A combination of weak growth and persistent inflation is exactly the kind of environment that generates volatility and pressures risk assets. Definitely something to monitor in the coming quarters.