The European Union posted unexpected growth in the first quarter of 2025, showcasing more resilience than anticipated. The forecasts still predict modest growth and lower inflation for the rest of the year.
The EU entered 2025 after a strong last quarter of 2024. Despite uncertainties and hits due to the ongoing tariff war pushed forward by Donald Trump, preliminary data shows a 0.3% growth in real GDP in the bloc. Â
The Commission’s Spring 2025 Economic Forecast expects real GDP growth at 1.1% in 2025 in the EU and 0.9% in the euro area, while growth should be higher in 2026, with a jump of 1.5% in the EU and 1.4% in the euro area. The forecast keeps in account that the current tariff war will continue to hamper European and global economies, even though the recent breaks in US and China reciprocal tariffs may bring a boon to world trade. In particular, the current situation should make for a 0.7% increase in EU exports during 2025, with accelerated growth of 2.1% in 2026.Â
Despite these uncertainties on the horizon, inflation continues to fall. The Harmonised Index of Consumer Prices (HICP) inflation is expected to reach the EU’s target of 2% in 2025, with a further decrease in 2026. Already, 2024 prompted a strong reduction of inflation, currently sitting at 2.4%.
Still, the EU keeps having some structural issues. Valdis Dombrovskis, Commissioner for Economy and Productivity, commented, “We cannot be complacent. The risks to the outlook remain tilted to the downside, so the EU must take decisive action to boost our competitiveness.” Â
