European Commission Lowers Growth Forecasts

2025-05-19 10:32 By Joana Taborda 1 min. read

The Euro Area economy is projected to grow by 0.9% in 2025 and 1.4% in 2026, down from 1.3% and 1.6% respectively forecasted last autumn, according to the European Commission’s Spring outlook.

The downgrade is primarily attributed to the impact of rising tariffs and increased uncertainty stemming from recent abrupt shifts in US trade policy.

On the inflation front, disinflation is now expected to proceed more rapidly than previously anticipated.

Inflation in the Eurozone is projected to ease to 2.1% by mid-2025, reaching the ECB’s target earlier than previously expected, and to decline further to 1.7% in 2026, down from the 1.9% projected in the autumn.

For Germany, the bloc’s largest economy, the Commission expects economic activity to broadly stagnate in 2025.

Heightened trade tensions are set to weigh heavily on exports, though private consumption is expected to rise modestly.

Investment is likely to remain flat this year.

However, growth is expected to rebound to 1.1% in 2026.



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European Commission Lowers Growth Forecasts
The Euro Area economy is projected to grow by 0.9% in 2025 and 1.4% in 2026, down from 1.3% and 1.6% respectively forecasted last autumn, according to the European Commission’s Spring outlook. The downgrade is primarily attributed to the impact of rising tariffs and increased uncertainty stemming from recent abrupt shifts in US trade policy. On the inflation front, disinflation is now expected to proceed more rapidly than previously anticipated. Inflation in the Eurozone is projected to ease to 2.1% by mid-2025, reaching the ECB’s target earlier than previously expected, and to decline further to 1.7% in 2026, down from the 1.9% projected in the autumn. For Germany, the bloc’s largest economy, the Commission expects economic activity to broadly stagnate in 2025. Heightened trade tensions are set to weigh heavily on exports, though private consumption is expected to rise modestly. Investment is likely to remain flat this year. However, growth is expected to rebound to 1.1% in 2026.
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