PARIS (Reuters) – The European Commission significantly decreased its gross domestic product (GDP) growth in the euro zone for 2025 on Monday and has slightly revised its expectations for 2026, citing a context of economic uncertainty with the trade war initiated by the United States.
According to spring forecasts for the European executive, the GDP of the 20 countries sharing the euro should grow by 0.9% in 2025 and increased by 1.4% in 2026.
During its latest fall forecasts, the European Commission provided for growth of 1.3% in 2025 for the euro zone and 1.6% in 2026.
“Growth prospects are revised significantly. This is largely due to the weakening of global trade prospects and increased uncertainty in terms of commercial policy,” the Commission said in a press release.
Growth prospects are based on the assumption that the United States will maintain its customs duties at the current level of 10% on all EU products, 25% on steel, aluminum and cars, and that they will not apply customs duties on pharmaceutical products and semiconductors.
Germany’s GDP, the first economy of the monetary block, should stagnate in 2025 and grow by 1.1% in 2026, detailed the Commission, which was tabling in the fall on a growth of 0.7% in 2025 and 1.3% for 2026 in the country.
In France, the European executive awaited growth of 0.6% in 2025 and 1.3% in 2026, against 0.8% for 2025 and 1.4% for 2026 according to forecasts in November 2024.
The European Commission has also confirmed its expectations concerning the harmonized consumer price index (IPCH) with a growth forecast of 2.1% in 2025. It revised its inflation forecast for 2026 by 2% during autumn forecasts to 1.7% from now on.
In terms of budgetary consolidation, the debt ratio on GDP of the 20 block countries should reach 91% in the euro zone in 2026 against around 89% in 2024.
“This modest increase is awarded to a less favorable differential between interest rates and the growth rate as well as significant stocks and flow adjustments,” said the European Commission.
(Written by Bertrand de Meyer, with Jan Strupczewski, edited by Kate Entringer)
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