IMF cut forecast for eurozone GDP growth amid uncertainty over US tariffs

The International Monetary Fund (IMF) has revised downward its economic growth forecast for the eurozone for this year and next year, citing uncertainty in global trade and US protectionist policies as main reasons.

The IMF lowered its forecast for the 20-nation currency bloc to 0.8% for this year and 1.2% for 2026. Both estimates were reduced by 0.2 points from the organization's forecasts made at the beginning of the year.

At the same time, the IMF considered the increase in consumption backed by real wage growth and the projected easing of fiscal policy in Germany as “compensating” factors. According to the organization's experts, these will support modest GDP growth in the region in 2026.

As noted in the IMF, Spain's economy demonstrates the strongest pace of development in Europe and may increase by 2.5% this year. That estimate was up 0.2 percentage points from the January forecast.

Regarding interest rates, the IMF also expects the European Central Bank's borrowing costs to be cut to 2% by mid-year from the current level of 2.25%.