Eurozone economy defies tariffs and turmoil

Overall the Eurozone economy has proven to be more resilient than expected against the backdrop of US tariffs, geopolitical developments and uncertainty, an expensive currency and persistent structural weaknesses. If anything, a strong labour market and real income gains have supported household consumption, while improved financing conditions have supported investment. Going forward, we think that improved financing and moderate inflation, higher defense spending, and resilient households will continue to soften the blow of ongoing trade and geopolitical tensions, public fiscal restraints and manufacturing competitiveness issues. We project growth to average around 1% in 2026 and 1.2% in 2027.