The OECD has revised its eurozone GDP growth forecast for 2025 to 1.0%, down from 1.3% in December, citing weak investment and growing geopolitical risks. The global growth forecast has also been reduced to 3.1%, reflecting the impact of trade disruptions on economic sentiment.
According to the Organization for Economic Co-operation and Development (OECD), Europe’s economic recovery will be weaker than expected, with trade disruptions and persistent inflationary pressures contributing to subdued growth. The Paris-based organization cut its eurozone GDP growth projection for 2025 to 1.0%, a 0.3 percentage point downgrade from its previous forecast.
The revision comes amid slowing investment and weaker consumer confidence, compounded by rising geopolitical and trade uncertainties. Global growth has also been trimmed by 0.2 percentage points to 3.1%, as trade tensions weigh on the global economy. The OECD’s updated projections, published in its March 2025 Economic Outlook, highlight concerns about economic fragmentation and the challenges facing a fragile European recovery.
Germany, the eurozone’s largest economy, faces the sharpest revisions, with GDP now expected to grow by just 0.4% in 2025, down from 0.7% previously. France and Italy have also seen modest downward adjustments to 0.8% and 0.7%, respectively. Spain, however, remains a relative bright spot, with growth forecast at 2.6% for 2025 and 2.2% for 2026, slightly above earlier estimates.
Inflation remains a persistent challenge for the region. Although price growth has slowed from its 2022 peaks, the OECD expects eurozone inflation to remain at 2.2% in 2025 before easing to 2.0% in 2026. Services inflation continues to exert pressure, with tight labor markets and rising goods inflation contributing to the overall inflationary environment.
In the United Kingdom, inflation is expected to remain elevated, averaging 2.7% in 2025 before dropping to 2.3% in 2026. The OECD also noted that in the United States, core inflation is projected to stay above central bank targets, with inflation expected at 2.8% in 2025.
