EU forecast: moderate growth expected despite global economic uncertainty

EU Commissioner for Economy and Productivity Valdis Dombrovskis said in Brussels that, after modest growth this year, growth is expected to accelerate to 1.5 percent in the EU and 1.4 percent in the euro area in 2026.

EU inflation is expected to fall from 2.4 percent to just below 2 percent in 2026. Inflation in the euro area is set to slow from 2.4% in 2024 to 2.1% this year and 1.7% in 2026.

The EU Commissioner recalled that despite the deteriorating outlook, the EU economy grew stronger than expected by 0.4% in the last quarter of 2024, largely thanks to strong domestic demand. This positive momentum continued in the first quarter of 2025, with preliminary data indicating real GDP growth of 0.3%, he said.

The document forecast global growth outside the EU at 3.2% for both 2025 and 2026, compared to 3.6% expected in autumn 2024. This mainly reflects the deteriorating outlook for the United States and China. The slowdown in global trade is even more pronounced: EU exports are expected to grow by just 0.7 percent this year, before accelerating to 2.1 percent in 2026.

Uncertainty, more than tariffs, is weighing on domestic demand. After a 1.8 percent decline in 2024, investment is expected to recover moderately, although more modestly than expected in the autumn. Investment is expected to grow by 1.5 percent in 2025, before accelerating further to 2.4 percent in 2026, they wrote.

Private consumption is expected to grow somewhat stronger than forecast in the autumn, reaching 1.5 percent in 2025 and 1.6 percent in 2026. This is largely due to stronger growth momentum in 2024 and a labor market that remains resilient amid rapidly easing inflationary pressures.