European Economic Forecast Spring 2025 (European Commission)

Summary

• Real GDP growth in 2025 is projected at 1.1% in the EU and 0.9% in the euro area, rising to 1.5% and 1.4% in 2026.p.15
• Euro area inflation averaged 2.4% in 2024 and is expected to average 1.7% in 2026, with EU inflation easing to 1.9%.p.15
• EU exports are expected to grow 0.7% this year and 2.1% in 2026, down from 2.2% and 3.0% in the autumn projections.p.17
• By the cut-off date, US tariffs on Chinese imports stood at 145%, while Chinese tariffs on US goods were 125%.p.16
• Gross fixed capital formation fell 1.9% in 2024 and is expected to grow 1.5% in 2025 and 2.4% in 2026.p.17
• The saving rate is expected to decline from 14.8% in 2024 to 14.2% in 2026.p.18
• The current account surplus is expected to fall from 4.4% of GDP in 2024 to 4.2% in both following years.p.17

Key insights

1. In the fourth quarter of last year, the EU economy grew by 0.4%, and GDP growth reached 1.0% for the entire year.p.15
2. The economy added over 1.7 million jobs, and private consumption expanded by 1.3%.p.16
3. Real GDP growth rose by 0.3% in the first quarter.p.16
4. Real private consumption is forecast to grow by 1.5% this year.p.18
5. Public consumption growth is projected to slow to 1.7% in 2025 and to 1.3% by the forecast's final year.p.18
6. Net external demand is set to subtract nearly 0.5% from growth in 2025.p.17
7. Risks to the outlook are tilted to the downside, including contagion from non-bank financial institutions.p.19