Market Highlight 04.05.2026

The euro area economy weakened again at the start of this year and is likely to remain under pressure as higher energy prices reduce consumer spending and delay the recovery that had been expected in key industrial sectors. The unresolved conflict in Iran has further reduced Europe’s hopes for a sustainable economic recovery, following the war in Ukraine in 2022 and President D. Trump’s tariff campaign last year. According to data released by Eurostat on Thursday, the euro area economy grew 0,1% in Q1/2026, down from 0,2% growth in Q4/2025. Germany’s economy accelerated thanks to a recovery in household and Government spending. In France, however, GDP stagnated as private consumption and exports declined, while growth also slowed in Italy, Spain, and the Netherlands.

As a net energy importer, Europe is more vulnerable than the U.S to higher energy prices caused by the conflict in the Middle East. The President of the European Commission said on Wednesday that the bloc had been forced to spend an additional 27 billion EUR, equivalent to around 31,53 billion USD, on energy imports due to higher prices since the first attacks on Iran in late February. The European Central Bank kept its policy rate unchanged at 2% last Thursday and lowered its growth forecast for the region this year to 0,9% from 1,2% announced in December 2025, while also revising down its projection for 2027.

Domestically, interbank USD/VND closed at 26.360 at the end of Wednesday’s session, ahead of the holiday, equivalent to an increase of around 0,2% from the beginning of the year to date. The effective daily ceiling was raised by a further VND 2 to 26.368.

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