Brussels (Brussels Morning Newspaper) – According to the European Commission, the eurozone economy is expected to experience slower growth this year and the next due to the trade war initiated by the United States and the uncertainty regarding its resolution.
In its forecast for the 27 European Union countries and the 20 nations using the euro, the EU’s executive branch reported that the eurozone’s gross domestic product is projected to grow by just 0.9% this year, a decline from the previously anticipated 1.3% last November.
Growth in the eurozone is expected to pick up to 1.4% in 2026; however, this remains below the 1.6% the Commission had projected six months prior.
“The outlook for growth is revised significantly downward. This largely owes to a weakening global trade outlook and higher trade policy uncertainty,”
The Commission stated.
How will U.S. tariffs impact eurozone GDP growth?
The growth outlook is based on the assumption that the U.S. will maintain its current tariffs: 10% on all European Union goods, 25% on steel and aluminum, 25% on cars, and no tariffs on pharmaceuticals and semiconductors.
“Risks to the outlook are tilted to the downside. Further fragmentation of global trade could mitigate GDP growth and reignite inflationary pressures. Climate-related disasters are also more frequent and remain a persistent source of downside risk for growth,” the Commission stated.
Can the eurozone recover amid global trade tensions?
According to experts, growth might accelerate if EU-U.S. trade tensions ease or if Europe expands trade with other nations and increases its defence spending.
The Eurozone’s unemployment rate is expected to decline this year and next, hitting 6.1% by 2026. Meanwhile, consumer inflation is projected to slow to 2.1% this year and 1.7% in 2026, down from 2.4% last year, according to the Commission.
However, public finances in the eurozone are set to weaken modestly, with the overall budget deficit increasing to 3.2% of GDP this year from 3.1% last year, and expected to reach 3.3% by 2026. The combined public debt of the eurozone is anticipated to rise to 89.9% of GDP this year, up from 88.9% in 2024, and projected to climb further to 91% in 2026.
